New York Hourly Calculator
New York State is the land of the Big Apple, Niagara Falls, and many payroll taxes and paycheck laws.
There’s a lot to keep track of when it comes to payroll. We’ll help you sort through it with these frequently asked questions (FAQs) from business owners based in New York state.
Frequently asked questions about federal tax
Do I have to withhold federal payroll taxes from my employees’ paychecks?
Yes. You’ll have to withhold federal income tax and FICA tax from your employees’ earnings. Some employees may also be subject to the Additional Medicare tax.
The amount of federal income tax you’ll withhold is based on information from each employee’s Form W-4, which they’ll complete when they’re hired. Your employee’s earnings and tax filing status, along with other factors, determine the withholding amount.
FICA stands for the Federal Insurance Contribution Act and the tax is a combination of Social Security and Medicare taxes. Employees pay 6.2% of their wages for Social Security tax but are only taxed on their first $147,000 of wages. They also pay 1.45% for Medicare tax and there is no wage cap.
Employees that earn more than $200,000 a year are subject to the additional Medicare tax and the rate is 0.9%.
Keep in mind these rates and amounts are for 2022 and can be changed each year.
Do employers have to chip in on federal payroll taxes?
Yes, employers must also pay some federal payroll taxes.
You’ll need to contribute the same amount of FICA tax as your employees. So you’ll pay 6.2% of each employee’s wages for Social Security tax (subject to the same wage cap) and 1.45% for Medicare tax.
Like the state, the federal government also has an unemployment tax. It’s called FUTA and it’s an annual tax employers pay on the first $7,000 of each employee’s wages. The FUTA rate for 2022 is 6%, but many employers only have to pay 0.6% each year.
When an employee leaves (voluntarily or involuntarily) when do I have to provide their final paycheck?
You will have to provide their final paycheck on the next regularly scheduled pay date.
Frequently asked questions about New York payroll tax
How do I know how much to withhold for New York income tax?
Like the Form W-4 for federal income tax, the amount of New York state income tax you withhold from an employee’s wages is based on the Form IT-2104. New employees should complete this form when they start and anytime their tax situation changes.
This form will also help you figure out how much New York City and Yonkers local income tax to withhold. We’ll talk more about this here.
I have employees that aren’t New York residents but work for me in New York. Do they pay New York income tax?
Yes. Non-residents who work in New York State are subject to withholding of New York income tax. These employees fill out Form IT-2104.1 and you use it to determine how much tax to withhold.
What is New York’s unemployment tax?
Each March, a notice with your state unemployment tax rate will be sent to you because rates are unique for each business. The 2022 rates range from 2.1% to 9.9% and are paid on the first $12,000 of each employee’s wages each year. This wage base changes each year. You can find the annual wage base on the New York State Department of Labor’s website.
New employers pay a rate of 3.4%.
What’s the minimum wage in New York?
For employers in New York City, the minimum wage varies based on city, county, and type of employment—for instance employees in the fast food industry and tipped workers. See New York’s webpage with all the details.
Do I have to provide disability insurance for my employees?
New York State requires that employers provide disability insurance coverage for off-the-job injury or illness, but you may recover some of the cost from your employees. The New York State Workers’ Compensation Board allows you to deduct 0.5% of wages paid up to a maximum of 60 cents per week per employee.
How much does the Paid Family Leave insurance program cost?
New York State’s Paid Family Leave insurance coverage is required of all employers with one or more employees. The cost of this coverage can be collected from employees through after-tax payroll deductions at a rate of 0.511% of each employee’s gross wages. This rate is for 2022 and the annual maximum you can collect from employees is $423.71.
Does New York State require me to report new hires?
Yes, you must report new hires. You’ll need to notify the New York Department of Taxation and Finance within 20 calendar days of when the employee begins work. If you don’t, you may be fined.
Do I have to obtain Workers’ Compensation?
Requirements to obtain Workers’ Compensation vary by state, this table outlines some of these requirements. If you determine that your company is required to purchase Workers’ Compensation insurance in your state, learn how to sign up for this insurance with Gusto. Sometimes, companies get a request for a workers’ comp audit—head to this article and click the workers’ comp audit reports dropdown for more information.
City-specific payroll taxes
What do I need to know about New York City or Yonkers city income tax?
Employees who reside in New York City are subject to the New York City income tax. Form IT-2104 will help you determine how much city income tax to withhold. This form will also help you with withholding the Yonkers city income tax for employees that reside in Yonkers.
These two taxes are withheld from employees that reside in either city. However, you’ll send the tax to the state of New York when you remit your state income taxes.
I’ve heard about the metropolitan commuter transportation mobility tax (MCTMT). What’s this tax and who pays it?
The MCTMT is collected to pay for the trains, ferries, bridges, tunnels, and subways that serve the New York City metro area.
With some exceptions, this tax is paid by employers with quarterly payroll expenses for covered employees that exceed $312,500 and that engage in business within the following counties:
- New York (Manhattan)
- Kings (Brooklyn)
- Richmond (Staten Island)
Rates for 2022 range between 0.11% and 0.34% and are based on your quarterly payroll expenses.
Using an automated payroll system can help you keep track of these different taxes.
Is it mandatory that I provide sick leave to my employees?
New York City’s Earned Safe and Sick Time Act requires all employers located in the Big Apple to provide safe and sick time to employees. Whether this time is paid or unpaid depends on how many employees you have. If you have five or more employees, you must provide up to 40 hours of paid sick leave each year. Employers with less than five employees must provide up to 40 hours of unpaid sick leave. Sick leave is accrued at the rate of one hour per every 30 hours worked.
If you need more assistance, an experienced accountant can help you find your way through the New York State payroll tax jungle.