What Payroll Taxes Do Employers Pay in New York?

New York is not a forgiving state when it comes to payroll taxes.

Between federal obligations, state-level taxes, New York City levies, and a handful of rules that apply specifically to certain industries or locations, the list of what an employer owes is longer than most business owners realize. And unlike some compliance issues that go unnoticed until an audit, payroll tax errors tend to surface quickly. Late deposits. Wrong withholding rates. Missing registrations. The penalties add up before you know something went wrong.

This guide covers every payroll tax New York employers are responsible for, the current rates, who pays what, and where the most common mistakes occur. No jargon, no calculator-speak. Just the information you need to know what you owe and how to stay on top of it.

Table of Contents

1. The Difference Between Employer Taxes and Employee Withholding
2. Federal Payroll Taxes: What Every Employer Pays
3. New York State Income Tax Withholding
4. New York State Unemployment Insurance (SUI)
5. New York State Disability Insurance (SDI)
6. New York Paid Family Leave (PFL)
7. New York Paid Sick Leave
8. The Metropolitan Commuter Transportation Mobility Tax (MCTMT)
9. New York City Payroll Tax
10. What Happens When You Get It Wrong
11. How to Register as a New York Employer
12. About Premier Payroll Solutions
13. FAQs
14. Conclusion + Key Takeaways

The Difference Between Employer Taxes and Employee Withholding

Before getting into rates, this distinction matters.

Some payroll taxes are paid entirely by the employer out of the company’s own funds. Some are withheld from the employee’s paycheck and remitted by the employer on the employee’s behalf. And some are split between both.

Knowing which is which matters for two reasons: it affects your actual labor cost per employee, and it affects what you’re liable for if something goes wrong.

Here is how New York payroll taxes generally break down:

Employer-paid only: Federal unemployment tax (FUTA), New York State unemployment insurance (SUI), and the employer’s share of FICA.

Employee-paid, employer withholds and remits: Federal and New York State income tax, New York City income tax, the employee’s share of FICA, Paid Family Leave contributions, and State Disability Insurance contributions.

Split between employer and employee: Social Security and Medicare (FICA) are each half employer, half employee.

Now, the rates.

Federal Payroll Taxes: What Every Employer Pays

These apply regardless of what state you’re in. But New York employers need to have them right before layering on state obligations.

Social Security tax: 6.2% on wages up to $176,100 (2025 wage base). The employer pays 6.2% and withholds another 6.2% from the employee, for a combined 12.4% per employee up to the wage base.

Medicare tax: 1.45% employer-paid, 1.45% withheld from the employee. For employees earning over $200,000, an additional 0.9% is withheld from the employee only. The employer does not pay the additional 0.9%.

Federal Unemployment Tax (FUTA): 6% on the first $7,000 of each employee’s wages per year. Most employers qualify for a credit of up to 5.4% if they pay their state unemployment taxes on time, which brings the effective FUTA rate down to 0.6%.

Federal income tax withholding: This is based on each employee’s W-4 filing. You withhold according to the IRS withholding tables in Publication 15-T. The employer does not pay federal income tax on behalf of employees. You collect it and remit it.

New York State Income Tax Withholding

New York State income tax rates run from 4% to 10.9% depending on income level and filing status, according to New York State tax rate tables.

As an employer, you withhold based on each employee’s IT-2104 form (the New York equivalent of the W-4). If an employee does not submit an IT-2104, you withhold as if they are single with no exemptions.

New York State income tax withholding is deposited and filed with the Department of Taxation and Finance on a schedule that depends on your total withholding liability:

• Under $700 per quarter: file and pay quarterly (Form NYS-45)
• $700 or more per quarter but less than $1,750 per month: file quarterly, pay monthly
• $1,750 or more per month: file quarterly, pay on an accelerated schedule

Missing a deposit deadline triggers interest and penalties. The state does not give much grace for first-time errors.

New York State Unemployment Insurance (SUI)

New York’s unemployment insurance is employer-paid. Employees do not contribute to SUI.

The 2025 taxable wage base is $12,800 per employee per year. Rates for new employers start at 2.1% for non-construction businesses and 3.4% for construction. After your first few years, your rate is assigned based on your experience rating, which is a calculation of how many of your former employees have filed unemployment claims.

Rates range from 0.6% to 7.9% once your experience rating kicks in. If you have high turnover (common in restaurants, security, and property management), expect your rate to sit toward the higher end of that range.

New York SUI is reported and paid quarterly using Form NYS-45, filed through the New York Department of Labor.

New York State Disability Insurance (SDI)

New York requires employers to provide short-term disability coverage for non-work-related injuries or illnesses.

Employers can purchase a state-approved disability insurance policy or self-insure if they meet certain requirements. Either way, coverage must be in place from day one of employment.

Employee contribution: up to 0.5% of weekly wages, capped at $0.60 per week, per the New York Workers’ Compensation Board. The employer covers any remaining cost above what employees contribute.

New York Paid Family Leave (PFL)

New York Paid Family Leave is employee-funded through payroll deductions. As an employer, you withhold the contribution from employee wages and remit it to your insurance carrier or the state fund.

The 2025 employee contribution rate is 0.388% of gross wages, capped at an annual maximum of $354.53 per employee. 

PFL covers up to 12 weeks of paid leave for bonding with a new child, caring for a seriously ill family member, or qualifying military exigencies. The benefit pays 67% of the employee’s average weekly wage, up to a cap.

Your obligation as an employer: collect the deduction, remit it properly, and make sure eligible employees can actually take the leave when they need it. Denying PFL to an eligible employee is a violation.

New York Paid Sick Leave

New York State’s paid sick leave law requires employers to provide paid sick leave based on company size:

• 4 or fewer employees and net income under $1 million: up to 40 hours of unpaid sick leave per year
• 4 or fewer employees and net income over $1 million: up to 40 hours paid sick leave per year
• 5 to 99 employees: up to 40 hours paid sick leave per year
• 100 or more employees: up to 56 hours paid sick leave per year

This is not a separate tax or deduction. But it affects payroll because those hours must be paid at the employee’s regular rate of pay, and employers are required to track accrual accurately.

New York City has its own sick leave rules that are slightly broader. If you operate in the five boroughs, check both the state and city requirements.

The Metropolitan Commuter Transportation Mobility Tax (MCTMT)

This one catches employers off guard.

The MCTMT applies to businesses in the 12-county Metropolitan Commuter Transportation District, which includes New York City (all five boroughs), Long Island (Nassau and Suffolk counties), and surrounding counties including Westchester, Rockland, Orange, Putnam, and Dutchess.

If your payroll expense exceeds $312,500 per quarter, you owe MCTMT at a rate of 0.34% of total payroll.

If you run a business based in Massapequa, Manhattan, Queens, or anywhere in that region, the MCTMT applies once you hit that quarterly payroll threshold. It is filed and paid through the New York State Department of Taxation and Finance.

This is one of the most commonly missed obligations among small businesses in the New York metro area. The threshold makes it feel like a “big business” issue, but growing businesses can cross it faster than they expect.

New York City Payroll Tax

If you have employees who work within New York City, there are additional obligations specific to the five boroughs.

New York City income tax is withheld from employees’ wages for NYC residents. Rates range from 3.078% to 3.876% depending on income. You withhold this from NYC resident employees the same way you withhold state income tax.

The New York City Payroll Tax is a separate employer-level tax on businesses with employees working in NYC. It applies to businesses that are not incorporated (sole proprietors, partnerships, LLCs not taxed as corporations). The rate is 0.34% of payroll.

If you operate in NYC and your entity type makes you subject to this tax, it is a quarterly obligation that must be filed with the New York City Department of Finance.

What Happens When You Get It Wrong

This is the section most payroll guides skip. It matters.

Late federal deposits: The IRS charges a failure-to-deposit penalty starting at 2% for deposits 1 to 5 days late, scaling up to 15% for amounts unpaid more than 10 days after the first IRS notice. These penalties are per occurrence, not annual. A pattern of late deposits adds up fast. See IRS guidance on employment tax penalties.

Late New York State filings: The state charges interest on late tax deposits and a separate failure-to-file penalty. The NYS-45 must be filed even in quarters where no wages were paid, or you will be penalized for not filing.

SUI rate penalties: If you fail to register for New York unemployment insurance before hiring employees, the state can assign you a penalty rate significantly higher than the standard new employer rate. It is a paperwork issue that becomes a real cost.

Misclassifying workers: If you treat employees as independent contractors and the state or IRS disagrees, you owe back payroll taxes, penalties, and interest for every misclassified worker. New York is aggressive about worker classification audits, particularly in construction, trucking, and service industries.

Missing MCTMT: Because this tax is not widely discussed, many Long Island and NYC-area businesses either file it late or are unaware they owe it. The Department of Taxation and Finance will eventually find the discrepancy.

The honest reality: most payroll tax errors in small businesses are not caused by dishonesty. They are caused by not knowing a rule exists, not having time to keep up with rate changes, or relying on software that does not correctly flag New York-specific obligations.

How to Register as a New York Employer

Before you can file and pay any New York payroll taxes, you need to be registered with the right agencies.

New York State withholding and SUI: Register through the NY Business Express portal. This single registration covers withholding tax and unemployment insurance in one application.

New York Paid Family Leave: Obtain a PFL policy from a New York State-approved insurance carrier, or arrange coverage through the state fund. This must be in place before you hire your first employee.

New York State Disability Insurance: Same as PFL. Arrange coverage through a licensed carrier or self-insure if you meet the state’s requirements.

New York City: If you operate in NYC, register separately with the NYC Department of Finance for city-level tax obligations.

New hire reporting: All New York employers must report new hires to the New York New Hire Registry within 20 days of their start date. This is a federal and state requirement used to enforce child support orders. Missing it is a separate penalty from payroll tax issues.

How Premier Payroll Keeps New York Employers Compliant Every Quarter 

New York payroll taxes are not simple. Between state withholding schedules, unemployment insurance experience ratings, PFL deductions, disability insurance requirements, the MCTMT threshold, and New York City-specific obligations, there is a lot to track correctly every single quarter.

Premier Payroll Solutions handles all of it on behalf of its clients, with a dedicated payroll expert assigned to every account. That means federal 941 deposits, NYS-45 quarterly filings, SUI payments, PFL withholding and remittance, and MCTMT calculations are managed as part of the standard service, not sold as add-ons.

For restaurants managing tip credit calculations alongside regular withholding, Premier’s restaurant payroll services handle the FICA tip credit tracking that most providers leave to the owner to figure out. For trucking companies with drivers across multiple states, multi-state withholding is managed in one system, so nothing falls through during a busy quarter. For property management businesses with employees spread across multiple properties and entity structures, allocations are handled cleanly so quarterly filings reflect the right numbers.

The 24/7 live human support model matters most for tax deadlines. When a deposit is due, and something does not look right, there is a real person to call, not a help center article. When a rate changes mid-year (as New York PFL and SUI rates regularly do), clients are notified and updated before the next payroll run, not after a filing error.

Premier Payroll also handles employee onboarding and new-hire reporting electronically, so the 20-day reporting requirement is met automatically rather than remaining on a to-do list. For businesses that frequently onboard, this removes a compliance step that is easy to miss when things get busy.

If you are managing New York payroll taxes yourself and want to know what it would look like to hand that off completely, talk to a payroll expert at Premier Payroll Solutions.

FAQs

How much are payroll taxes in New York?

For most small businesses, employer-paid payroll taxes usually land between 8% and 12% of gross payroll before benefits.

What payroll taxes do employers pay in New York?

Employers pay Social Security, Medicare, unemployment taxes, disability insurance, and other state-specific payroll obligations where applicable.

Are there local payroll taxes in New York?

Yes. NYC residents may have city income tax withheld, and some businesses owe additional metro-area payroll taxes.

How much federal tax is deducted from a paycheck in New York?

It depends on the employee’s W-4 elections, income level, local tax obligations, and Social Security and Medicare withholding.

Who pays payroll taxes in New York?

Both employers and employees contribute. Employers pay certain taxes directly, while employee taxes are withheld from paychecks.

How do I register for payroll taxes in New York?

Businesses register through the New York Business Express portal, then secure required payroll-related insurance policies separately.

Conclusion

New York payroll taxes are not the kind of thing you want to figure out as you go. The rates change. The filing schedules are tied to your liability size. Local taxes depend on where your employees actually work, not just where your business is registered. And the penalties for getting it wrong are real, whether it is a late deposit, a missed MCTMT filing, or an unemployment insurance registration you never got around to.

Most small business owners in New York are not failing at payroll taxes because they do not care. They are failing either because they did not know a specific rule applied to them, or because they are running a business and cannot track every rate change and quarterly deadline simultaneously.

Getting this right means knowing every tax you owe, filing on schedule, staying current when rates change, and having someone accountable when something does not add up. That is what a good payroll provider does.

Key Takeaways

• New York employers owe federal FICA, FUTA, and income tax withholding plus New York-specific obligations, including SUI, SDI premiums, PFL remittance, and potentially the MCTMT.
• The MCTMT applies to businesses in the 12-county metro region (including Long Island and NYC) once quarterly payroll exceeds $312,500. It is widely missed by growing businesses.
• New York City adds income tax withholding for resident employees and an employer-level payroll tax for unincorporated businesses operating in the five boroughs.
• Late deposits, missed filings, and incorrect worker classification all carry financial penalties. New York does not have a grace period for employers who “didn’t know.”
• Registering correctly before your first hire matters. SUI registration, PFL coverage, and new-hire reporting all have deadlines that begin on day one of employment.

Running a business is your priority. Payroll is ours.

Talk to a real payroll expert today