Payroll Tax in New York: Complete Guide 2026
Data Notice: Figures, rates, and statistics cited in this article are based on the most recent available data at time of writing and may reflect projections or prior-year figures. Always verify current numbers with official sources before making financial, medical, or educational decisions.
Payroll Tax in New York: Complete Guide 2026
Tax information is for educational purposes only and does not constitute tax advice. Consult a licensed tax professional for your specific situation.
New York State has multiple layers of payroll taxation that employers and employees must navigate, including state unemployment insurance (UI), disability benefits (DBL), paid family leave (PFL), the Metropolitan Commuter Transportation Mobility Tax (MCTMT), and state income tax withholding. For businesses operating in New York City, there are additional considerations including the city’s own income tax withholding. This guide breaks down each component with current rates, wage bases, and compliance tips.
New York Payroll Tax Rates (2026)
Employer-Paid Taxes
| Tax | Rate | Wage Base / Basis |
|---|---|---|
| State Unemployment Insurance (UI) | ~2.025% — ~9.825% | First ~$12,800 per employee |
| Re-employment Services Fund | ~0.075% | First ~$12,800 |
| MCTMT (NYC metro employers) | ~0.34% — ~0.60% | Total payroll |
Employee-Paid Taxes
| Tax | Rate | Wage Base |
|---|---|---|
| Disability Benefits (DBL) | ~0.50% | Capped at ~$0.60/week |
| Paid Family Leave (PFL) | ~0.388% | First ~$89,343 |
| State income tax withholding | Varies | No cap |
| NYC income tax withholding (if applicable) | Varies | No cap |
Combined Federal and State Overview
| Tax | Rate | Paid By | Wage Base |
|---|---|---|---|
| Social Security (OASDI) | ~6.20% | Employee + ~6.20% employer | ~$176,100 |
| Medicare | ~1.45% | Employee + ~1.45% employer | No cap |
| Additional Medicare | ~0.90% | Employee only | Over ~$200,000 |
| NY UI | ~2.025% — ~9.825% | Employer | ~$12,800 |
| NY DBL | ~$0.60/week max | Employee | Capped |
| NY PFL | ~0.388% | Employee | ~$89,343 |
| MCTMT | ~0.34% — ~0.60% | Employer (metro area) | Total payroll |
How New York Payroll Taxes Work
Unemployment Insurance (UI)
New York’s UI is an employer-paid tax based on an experience rating system. New employers typically pay ~4.025% for the first three years. After the initial period, rates are experience-rated from ~2.025% to ~9.825% based on your company’s claims history. The taxable wage base is the first ~$12,800 of each employee’s annual wages.
An additional surcharge for the Re-employment Services Fund of ~0.075% applies to the same wage base.
Disability Benefits (DBL)
New York requires employers to provide short-term disability insurance. The employee contribution is capped at $0.60 per week ($31.20 annually). Employers may also share in the cost depending on the insurance plan selected. Coverage provides ~50% of average weekly wages up to ~$170 per week for up to ~26 weeks.
Paid Family Leave (PFL)
New York’s Paid Family Leave program provides job-protected, paid leave for qualifying family events. For 2026, the employee contribution rate is 0.388% of gross wages up to the statewide average weekly wage cap ($89,343 annualized). PFL benefits provide ~67% of the employee’s average weekly wage, capped at ~67% of the statewide average weekly wage.
Metropolitan Commuter Transportation Mobility Tax (MCTMT)
Employers in the Metropolitan Commuter Transportation District (MCTD) — which includes New York City, Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess, and Westchester counties — must pay the MCTMT. The rate is:
- ~0.34% for employers with quarterly payroll under ~$312,500
- ~0.34% to ~0.60% on a graduated basis for larger payrolls
Self-employed individuals with net earnings from the MCTD over ~$50,000 also owe MCTMT.
Employer Registration and Compliance
New York employers must register with the Department of Labor for UI and with the Workers’ Compensation Board for DBL and PFL. Key requirements:
- Quarterly filing: File Form NYS-45 (Quarterly Combined Withholding, Wage Reporting and Unemployment Insurance Return) each quarter.
- Payment frequency: Withholding deposits may be required quarterly, monthly, or semi-weekly based on payroll size.
- Annual reconciliation: Form NYS-45-ATT provides annual wage detail.
- Record retention: Maintain payroll records for at least ~6 years.
Comparison to National Average
| State | UI Wage Base | Disability Insurance | Paid Family Leave | Additional Employer Tax |
|---|---|---|---|---|
| New York | ~$12,800 | Yes (DBL) | Yes (PFL) | MCTMT |
| California | ~$7,000 | Yes (SDI) | Yes (PFL) | ETT |
| New Jersey | ~$42,300 | Yes (TDI) | Yes (FLI) | None |
| Texas | ~$9,000 | No | No | None |
| National average | ~$16,500 | Varies | Varies | Varies |
New York’s UI wage base of ~$12,800 is below the national average, but the combination of DBL, PFL, and MCTMT creates a comprehensive and relatively costly payroll tax system.
Tips for Minimizing New York Payroll Tax
-
Monitor your UI experience rate. Contest unjustified unemployment claims and maintain accurate records to keep your rate as low as possible.
-
Track PFL wage caps. Employee PFL contributions stop once wages reach the annualized cap (~$89,343), reducing deductions for higher earners later in the year.
-
Understand MCTMT thresholds. If your payroll is near the threshold for higher rates, review the graduated rate schedule to plan accordingly.
-
File and pay on time. New York imposes penalties and interest on late filings. Use the Department of Tax and Finance’s online portal for timely submissions.
-
Classify workers correctly. Misclassification as independent contractors triggers back taxes, penalties, and potential criminal liability in New York.
-
Review DBL insurance annually. Compare plans from different carriers to minimize employer-shared costs while maintaining required coverage.
-
Coordinate with NYC withholding. If employees work in New York City, ensure city income tax is properly withheld in addition to state taxes.
Key Takeaways
- New York payroll taxes include UI (~2.025% —
9.825%), DBL ($0.60/week employee cap), PFL (~0.388% employee), and MCTMT (~0.34% — ~0.60% employer in metro area). - The UI wage base is ~$12,800 per employee; PFL caps at ~$89,343 of annual wages.
- NYC-area employers face the additional MCTMT, which applies to total payroll.
- Employers must file quarterly using Form NYS-45.
- New York requires both disability insurance and paid family leave coverage.
- Record retention requirements are ~6 years in New York.
Next Steps
- Federal Income Tax Guide 2026 — Understand federal payroll obligations alongside New York requirements.
- Self-Employment Tax Guide — MCTMT and other considerations for self-employed New Yorkers.
- State Income Tax Rates Comparison 2026 — See New York’s overall tax picture.
- Tax Bracket Calculator — Estimate combined payroll and income tax.
- Find a CPA Near You — Get professional help with New York payroll compliance.