New York Payroll Taxes and Withholding Guide (2026)

What Makes New York Payroll Different

Federal payroll tax is the same in every state. What changes from one state to the next is the second layer: state income tax withholding, state-run leave and disability programs, employer unemployment taxes, and in a few states, local city taxes. New York has one of the deepest stacks in the country because it layers a graduated state income tax, two city-level wage taxes, and two employee-funded insurance programs on top of the federal baseline.

Four New York-specific items drive most of the confusion. First, state income tax withholding is set by a separate state form, the IT-2104, because the redesigned federal Form W-4 no longer uses allowances. Second, New York City and Yonkers each levy their own resident wage taxes, so two employees with identical salaries can take home different amounts based only on which city they live in. Third, New York runs both a Paid Family Leave program and a Disability Benefits Law program funded by employee deductions. Fourth, the Unemployment Insurance wage base jumped to $17,600 for 2026 under a new permanent formula. Each is covered in detail below, with the federal baseline explained in the how payroll taxes work guide.

Employee Withholding Overview in New York

A New York employee sees more lines on a pay stub than a worker in a no-income-tax state. The deductions fall into four groups: federal taxes, New York State income tax, New York local tax (NYC or Yonkers, if the worker lives there), and the state insurance programs (PFL and DBL).

The federal lines work identically to any other state. For Social Security, the 2026 wage base is $184,500, after which Social Security stops for the year. Medicare has no cap. What is unique to New York is the state income tax line, the NYC or Yonkers local line, and the PFL and DBL deductions, all administered by New York agencies.

How Is New York State Income Tax Withheld?

New York State Personal Income Tax is graduated. For 2026 the state reduced the marginal rates on its lower and middle brackets under Chapter 59 of the Laws of 2025, while keeping a top marginal rate of 10.9% on the highest incomes. The exact bracket thresholds and rates are published in the state withholding methods.

The exact amount withheld from each paycheck is not a flat percentage. The New York State Department of Taxation and Finance publishes the withholding methods in Publication NYS-50-T-NYS (1/26), which employers use to convert the IT-2104 elections, pay frequency, and wages into a per-period withholding amount. These tables were revised for 2026 to reflect the rate reductions and are linked in the Sources section.

The IT-2104 Form

New York employees complete Form IT-2104, the Employee's Withholding Allowance Certificate, for state withholding, in addition to the federal Form W-4. Since 2020 the federal W-4 no longer uses allowances, so New York provides the separate IT-2104 to set state, NYC, and Yonkers withholding. The IT-2104 also has lines specific to New York City and Yonkers residents. Federal withholding mechanics are covered in the W-4 withholding explained guide.

New York City and Yonkers Local Taxes

This is the layer that sets New York apart from California and most other income-tax states. New York has two city-level wage taxes, and both depend on where the employee lives, not only where they work.

New York City resident income tax

New York City residents pay a separate NYC personal income tax in addition to the state tax. NYC resident rates are graduated, running from roughly 3.078% to 3.876% depending on income and filing status, and employers withhold the city tax using the NYS-50-T-NYC tables. There were no changes to the NYC wage bracket tables for 2026. The tax applies only to NYC residents. Someone who commutes into Manhattan but lives in New Jersey or on Long Island does not owe NYC income tax, because the NYC commuter tax was repealed in 1999.

Yonkers resident and nonresident taxes

Yonkers has two separate wage taxes. Yonkers residents pay a resident income tax surcharge equal to 16.75% of their New York State income tax liability, which is a surcharge on the state tax owed rather than a flat rate on wages. Separately, nonresidents who work in Yonkers but live elsewhere pay a Yonkers nonresident earnings tax of 0.5% on wages earned in Yonkers, reported on Form Y-203. Employers withhold the Yonkers amounts using Publication NYS-50-T-Y (1/26).

No other New York cities impose a local wage tax withheld from paychecks. An employee who lives and works in Buffalo, Rochester, Albany, or Syracuse has only state income tax, with no city line. Employers in the New York City metropolitan region also owe the Metropolitan Commuter Transportation Mobility Tax (MCTMT) on payroll, an employer-level tax whose rate depends on payroll size and location and is paid by the company rather than withheld from employees.

New York Paid Family Leave and Disability (PFL and DBL)

New York's closest analog to California SDI is a pair of programs: Paid Family Leave (PFL) and the Disability Benefits Law (DBL). Both are administered through the employer's disability insurance carrier and overseen by the Workers' Compensation Board, and both can appear as deductions on a pay stub.

For 2026 the PFL employee contribution is 0.432% of gross wages per pay period, capped at a maximum annual contribution of $411.91. PFL provides up to 12 weeks of paid leave at 67% of the employee's average weekly wage, up to a maximum weekly benefit of $1,228.53 in 2026. The deduction is fully employee-funded. Details are referenced in the understanding payroll deductions guide.

DBL is the older statutory short-term disability program. An employer may, but is not required to, collect an employee contribution computed at 0.5% of wages, capped at $0.60 per week (about $31.20 per year). Many employers absorb the DBL cost, so the line is small or absent on some stubs. PFL and DBL are separate programs with separate funding and should appear as distinct lines when both are deducted.

Employer Payroll Obligations in New York

New York employers carry both the federal employer taxes and the state Unemployment Insurance tax. The federal side, covered in the employer payroll tax obligations guide, includes the matching 6.2% Social Security and 1.45% Medicare plus Federal Unemployment Tax (FUTA). On top of that, New York adds state Unemployment Insurance and the Re-employment Services Fund.

For 2026 the New York Unemployment Insurance taxable wage base is $17,600. Beginning in 2026, the wage base permanently adjusts each January 1 to 18% of the state average annual wage, rounded up to the nearest $100, which is why it rose sharply from prior years. New employers pay a total contribution rate of 4.1% (a 4.025% UI rate plus the 0.075% Re-employment Services Fund). Experience-rated employers pay a total rate between 1.7% and 9.5%. These are employer costs only and do not appear on an employee pay stub. The combined cost-to-hire can be modeled with the employer payroll tax calculator.

New York Supplemental Wage Withholding

Supplemental wages are payments outside regular salary: bonuses, commissions, overtime, sales awards, and back pay. When New York supplemental wages are paid separately from regular wages, the employer can withhold at a flat rate rather than running them through the regular schedules.

• New York State supplemental withholding: flat 11.70%.
• New York City supplemental withholding (NYC residents): flat 4.25%.
• Yonkers supplemental withholding: Yonkers residents and nonresidents use the rates in Publication NYS-50-T-Y.

These flat rates apply only to New York income taxes. Federal income tax withholding, Social Security, Medicare, and the PFL deduction still apply to supplemental wages under their own rules. The federal supplemental withholding rate is separate and is set by the IRS.

New York Filing and Payment Frequency

New York employers report withholding and Unemployment Insurance together on one quarterly return, Form NYS-45, the Quarterly Combined Withholding, Wage Reporting, and Unemployment Insurance Return. It is generally due the last day of the month following the end of each quarter. Wage and withholding detail for every employee is reported on the same filing.

Withheld New York income tax is remitted on Form NYS-1 between quarterly returns, on a schedule (typically within 3 or 5 business days) that depends on how much tax the employer accumulates. The federal deposit schedule is covered separately in the payroll tax deadlines guide. New employees must also be reported to the New York New Hire Reporting Center within 20 calendar days of hire. Full procedures are published in Publication NYS-50, the Employer's Guide, linked in the Sources section.

How Take-Home Pay Works in New York

The calculation sequence runs from gross pay down to net pay. Pre-tax deductions reduce the income tax base but not the Social Security, Medicare, PFL, or DBL base, which are calculated on gross wages.

1. Start with gross wages for the pay period.
2. Subtract any pre-tax deductions (401(k), Section 125 health premiums) to find taxable wages for income tax.
3. Apply federal income tax withholding using the Form W-4 and IRS Publication 15-T.
4. Apply New York State income tax withholding using the IT-2104 and the NYS-50-T-NYS methods.
5. If the worker lives in NYC, apply NYC resident tax; if in Yonkers, apply the Yonkers surcharge.
6. Subtract Social Security (6.2%) and Medicare (1.45%) on gross wages.
7. Subtract the PFL deduction (0.432%) and any DBL contribution on gross wages.
8. The remainder is net pay.

To see exact figures for a specific salary, filing status, and pay frequency, use the paycheck calculator or the take-home pay calculator for a full pre-tax benefits stack.

What New York Employees Should Check on a Pay Stub

• NY State tax line: Confirm New York income tax is being withheld and reflects your IT-2104 elections, not just the federal W-4.
• NYC or Yonkers line: If you live in New York City or Yonkers, verify the local tax is present. If you only work there but live elsewhere, NYC tax should not appear.
• PFL line: Verify the Paid Family Leave deduction at 0.432% of gross wages, stopping once you reach the $411.91 annual cap.
• DBL line: If your employer collects it, the disability deduction should never exceed $0.60 per week.
• Social Security cap: Late in the year, Social Security should stop once year-to-date wages reach $184,500.

What New York Employers Should Verify Before Running Payroll

• State registration: Confirm an active NYS Department of Labor employer account and the assigned UI contribution rate on the annual rate notice.
• IT-2104 on file: Collect a completed IT-2104 for each employee, including the NYC and Yonkers resident lines where they apply.
• Local tax setup: Confirm NYC and Yonkers withholding is configured by employee residence, not work location.
• PFL and DBL coverage: Confirm the 2026 PFL rate of 0.432% (cap $411.91) and any DBL deduction are loaded, and that disability coverage is in place with a licensed carrier.
• UI wage base: Confirm the 2026 wage base of $17,600 and the 0.075% Re-employment Services Fund are set in the payroll system.
• New hire reporting: Report each new worker to the New York New Hire Reporting Center within 20 days.

New York Payroll Quick Facts (2026)

Frequently Asked Questions