New York Payroll Compliance Guide 2026: Complete Employer Reference

New York Payroll Overview: Why NY Is Complex

No state in the continental U.S. presents more payroll complexity than New York. Where Texas has one state payroll tax obligation, New York has five — and one of them (MCTMT) applies only to certain geographic areas. Each tax has a different rate, different wage base, different reporting system, and different legislative history. The state also enforces wage payment laws more aggressively than almost any other jurisdiction, through the Wage Theft Prevention Act (WTPA) and the New York Department of Labor (NYDOL).

If you employ workers in New York — especially in New York City, Long Island, or Westchester — you need a system that handles all five layers without gaps. Manual payroll is genuinely difficult here. PFL rates, SUI wage bases, and minimum wages all shift year to year in New York — sometimes on different schedules.

Below is the full 2026 breakdown — rates, deadlines, and registration for each obligation.

New York Payroll Taxes: 2026 Complete Rate Table

State Income Tax (PIT) Withholding

New York has a progressive personal income tax with rates from 4% to 10.9%. The top marginal rate of 10.9% applies to income over $25 million, making it the second-highest state income tax rate in the country after California. For most employees, the effective marginal rate is in the 6%–9% range.

You withhold PIT based on the employee’s Form IT-2104 (New York State Employee’s Withholding Allowance Certificate) and the withholding tables published annually by the New York State Department of Taxation and Finance (DTF). If an employee does not submit an IT-2104, withhold as if they claimed zero allowances — resulting in maximum withholding.

NYC and Yonkers Additional Withholding

New York City imposes its own income tax on residents, with rates from 3.078% to 3.876%. Yonkers imposes a surcharge of 16.75% of the state tax for residents and 0.5% for non-residents who work in Yonkers. These are separate withholding obligations that must be tracked in your payroll system. Employees who live in NYC or Yonkers complete the IT-2104 and mark their city, triggering the appropriate additional withholding.

PIT Filing and Deposit Schedule

New York follows a combined quarterly filing and periodic deposit system similar to federal. Your deposit frequency depends on your total withholding liability:

• Annual filers: Less than $700/year in withholding
• Quarterly filers: $700–$2,000/year
• Monthly filers: $2,001–$100,000/year (deposit by 15th of following month)
• Semi-weekly filers: Over $100,000/year (same schedule as federal semi-weekly)

Quarterly returns are filed on Form NYS-45 (Quarterly Combined Withholding, Wage Reporting, and Unemployment Insurance Return) through the DTF online portal at tax.ny.gov. This is the key form that combines your PIT withholding report, wage reporting, and SUI filing into a single submission.

SUI: Unemployment Insurance

New York unemployment insurance is administered by the New York State Department of Labor (NYDOL). Key figures for 2026:

• New employer rate: 3.4% (for employers in business fewer than 3 years without an assigned rate)
• Experienced employer range: 0.6% to 7.9%
• Taxable wage base: $12,500 per employee per calendar year
• Maximum SUI cost at new-employer rate: $425 per employee per year (3.4% × $12,500)
• Maximum SUI cost at top rate: $987.50 per employee per year (7.9% × $12,500)

The $12,500 wage base is higher than Florida ($7,000) or Texas ($9,000), New York pays higher UI benefits than most states, which pushes the wage base up. New York also has a Reemployment Service Fund (RSF) surcharge that is added to experienced employer rates — check your annual rate notice for your combined rate including any surcharge.

SUI is reported quarterly on Form NYS-45, combined with PIT withholding. This single form covers both obligations, which simplifies filing but requires you to track both correctly throughout the quarter.

Paid Family Leave (PFL)

New York’s Paid Family Leave program pays 67% of the employee’s average weekly wage for up to 12 weeks — one of the highest replacement rates in the country. The program is entirely employee-funded — you withhold PFL contributions from employee wages and remit them to your PFL carrier (private insurance carrier or the state fund through the Workers’ Compensation Board).

2026 PFL Rates and Benefits

PFL covers three qualifying reasons:

1. Bonding with a newly born, adopted, or fostered child
2. Caring for a family member with a serious health condition
3. Addressing qualifying needs related to a family member’s military deployment

Note that PFL does not cover the employee’s own illness — that is covered by SDI (State Disability Insurance). Employees can sometimes combine PFL and SDI for a longer continuous leave, but they are separate programs with separate eligibility.

PFL Administration

PFL is integrated into your disability insurance (DBL) policy. Most employers purchase a combined DBL/PFL policy from a licensed carrier. You collect the employee contribution from each paycheck (up to the annual maximum) and pay it to the carrier. You do not need to file a separate PFL return — the carrier handles benefit claims and state reporting. You must, however, keep records of PFL contributions withheld and included in your payroll records.

State Disability Insurance (SDI)

New York’s Statutory Disability Benefits (DBL) program covers employee disabilities not caused by work. This is distinct from PFL (which covers family care leave) and workers’ comp (which covers work-related injuries).

• Employee contribution: $0.60 per week (withheld from each paycheck)
• Employer contribution: The employer pays the remainder of the premium beyond what the $0.60/week employee contribution covers. Your carrier sets the rate based on your workforce demographics.
• Maximum weekly benefit: 50% of the employee’s average weekly wage, up to $170 per week
• Maximum benefit duration: 26 weeks per 52-week period
• Waiting period: 7 days before benefits begin

Coverage is mandatory for virtually all New York employers with one or more employees. Purchase a combined DBL/PFL policy from a licensed carrier, or apply for self-insurance through the Workers’ Compensation Board if you have at least 50 employees. The state fund (State Insurance Fund, NYSIF) is also an option.

NYC MCTMT: Metropolitan Commuter Transportation Mobility Tax

The Metropolitan Commuter Transportation Mobility Tax (MCTMT) funds the Metropolitan Transportation Authority (MTA) and applies to employers with payroll in the Metropolitan Commuter Transportation District (MCTD).

MCTD Counties

The MCTD includes: New York City (all five boroughs) plus Dutchess, Nassau, Orange, Putnam, Rockland, Suffolk, and Westchester counties.

Employer MCTMT Rates for 2026

MCTMT is filed quarterly with the New York State Department of Taxation and Finance on Form MTA-305 (or through the DTF online portal). It is due by the last day of the month following the quarter. For small employers with quarterly MCTD payroll under $312,500, no MCTMT applies at all.

Wage Payment Laws and Final Paychecks

New York’s Wage Theft Prevention Act (WTPA) (New York Labor Law Article 6) is one of the most employee-protective wage payment frameworks in the country. The NYDOL enforces it aggressively, and private lawsuits under the WTPA can include liquidated damages of up to $5,000 per employee, plus attorneys’ fees.

Pay Frequency Requirements

The “manual worker” category catches many NY employers off guard. A restaurant employee who buses tables, a warehouse worker who packs orders, a retail employee who stocks shelves — all are likely “manual workers” who must be paid weekly. Paying them bi-weekly without NYDOL approval violates New York Labor Law, even if the wages are correct.

Wage Theft Prevention Act: Notice Requirements

You must provide each new employee with a written wage notice at the time of hire (before the employee begins work) that states:

• Rate of pay (and overtime rate, if different)
• Pay basis (hourly, salary, commission, etc.)
• Regular and overtime rates
• Regular pay days
• Employer name and any DBA names
• Employer address and phone number

The notice must be in English and the employee’s primary language if the NYDOL has published a template in that language. The employee must sign acknowledging receipt. Keep the signed copy for six years.

Final Paycheck Rules

New York requires final wages to be paid by the next regularly scheduled payday, for both terminations and voluntary quits. Accrued, unused vacation must be paid out if your policy provides for it (and the NYDOL treats written vacation policies as enforceable wage agreements). Severance is governed by your employment agreement or company policy, not state law.

Overtime Rules

New York follows the federal FLSA for most overtime purposes but has some differences:

• Standard overtime: 1.5× regular rate for hours over 40 in a workweek (same as FLSA)
• Hospitality industry: New York’s Hospitality Industry Wage Order has spread-of-hours rules. Employees in restaurants and hotels who work more than 10 hours in a single day are entitled to one additional hour’s pay at the minimum wage for that day — separate from and in addition to overtime
• Call-in pay: Employees who report to work and are sent home must be paid for at least 4 hours (or their scheduled shift, if shorter)

New Employer Registration Steps

Step 1: Federal EIN

Apply at irs.gov/ein. Online applications are processed immediately.

Step 2: Register with NY DTF for Withholding

• Where: NY Business Express at businessexpress.ny.gov, or directly through NY DTF at tax.ny.gov
• When: Before running your first payroll — you need a NY Employer Registration Number to file Form NYS-45
• What to complete: Form DTF-17 (Application to Register for a Sales Tax Certificate of Authority, if applicable) and NY-withholding registration through the online portal

Step 3: Register for Unemployment Insurance with NY DOL

• Where: NY DOL Employer Registration at labor.ny.gov
• When: Within 10 days after becoming a covered employer (paying $300 or more in wages in any calendar quarter, or employing one or more workers on 30 days in a year)
• Form: Register through the NY DOL Employer Online Services portal

Step 4: Obtain DBL/PFL Coverage

Purchase a combined Statutory Disability Benefits (DBL) and Paid Family Leave (PFL) policy from a licensed NY carrier (e.g., NYSIF, MetLife, Hartford, Lincoln) within 4 weeks of hiring your first employee. Present the policy certificate to the Workers’ Compensation Board and post a DBL/PFL notice at your workplace.

Step 5: NY New-Hire Reporting

Report all new hires and rehires to the New York New Hire Reporting Center at newhire.newyork.gov within 20 days of the hire date.

Step 6: Workers’ Compensation Insurance

New York requires workers’ comp coverage for virtually all employers with one or more employees. Purchase a policy before the first day of work. Penalties for operating without coverage include up to $2,000 per 10-day period of non-compliance plus criminal liability.

New York Minimum Wage 2026

New York’s minimum wage varies by location and has been on a multi-year increase schedule:

New York’s tip credit structure is different from the federal model. The state uses a “tip credit” expressed as a minimum cash wage plus tips, rather than a flat subtraction from the full minimum wage. Food service workers in NYC must receive at least $13.35 per hour in direct wages plus tips sufficient to bring total pay to $16.50. Service employees at hotels follow a similar formula.

NY Payroll Compliance Calendar 2026

Frequently Asked Questions

What is the New York SUI rate for new employers in 2026?

New employers pay SUI at 3.4% on the first $12,500 of each employee’s wages per year, for a maximum of $425 per employee. This rate applies for approximately the first three years until the NY DOL assigns an experience rate. Experienced employer rates range from 0.6% to 7.9%.

What is the New York PFL rate for 2026?

The 2026 PFL employee contribution rate is 0.388% of gross wages, with a maximum annual contribution of $333.25 per employee. You withhold this from each paycheck until the employee hits the annual cap, then stop withholding for the rest of the year. Remit contributions to your DBL/PFL carrier.

What is the minimum wage in New York City for 2026?

The NYC minimum wage is $16.50 per hour for all employers. Long Island and Westchester County are also at $16.50. The rest of New York State is at $15.50 per hour. These rates apply as of the effective date in 2026 — confirm the exact effective date with the NYDOL, as increases sometimes take effect on January 1 or on a later date mid-year.

What is the NYC MCTMT and who pays it?

The MCTMT is an employer tax of up to 0.34% of quarterly payroll paid to employees who work in the 8-county Metropolitan Commuter Transportation District. It applies only when your quarterly MCTD payroll exceeds $312,500. File quarterly on Form MTA-305 with the NY DTF. Self-employed individuals with MCTD net earnings over $50,000 pay at different rates.

When must New York employers issue a final paycheck?

New York requires final wages by the next regularly scheduled payday, for both discharges and voluntary quits. Accrued vacation must be paid if your policy provides for payout. The WTPA provides for liquidated damages of up to $5,000 per employee plus attorneys’ fees for wage violations.

What is the NY SDI contribution rate for employees?

Employee SDI contribution is $0.60 per week, withheld from each paycheck and remitted to your DBL carrier. The employer pays the remainder of the premium. The employee’s annual contribution is capped at $31.20 per year ($0.60 × 52 weeks).