What Payroll Taxes Do Employers Pay in New York?

Payroll taxes are mandatory contributions for businesses employing staff, funding government programs like Social Security, Medicare, and unemployment benefits. These taxes are typically calculated based on employee wages. Employers in New York, like those across the nation, navigate a complex landscape of federal and state-specific payroll tax requirements. Understanding these obligations is important for maintaining compliance and managing operational costs effectively.

Federal Employer Payroll Taxes

All employers must contribute to federal payroll tax programs. These contributions primarily include Social Security and Medicare taxes, collectively known as Federal Insurance Contributions Act (FICA) taxes, along with Federal Unemployment Tax Act (FUTA) taxes. These federal taxes ensure a safety net for workers through retirement, healthcare, and unemployment benefits.

Social Security tax is levied to fund retirement, disability, and survivor benefits. For 2025, the employer’s share of Social Security tax is 6.2% of an employee’s wages, up to a wage base limit of $176,100. This means that once an employee’s annual earnings exceed this threshold, no further Social Security tax is owed on their additional wages for that year.

Medicare tax, which supports the Medicare healthcare program, is also a component of FICA. The employer’s share of Medicare tax is 1.45% of all employee wages, with no wage base limit. This tax applies to every dollar an employee earns.

The Federal Unemployment Tax Act (FUTA) provides funds for state unemployment compensation programs. Employers generally pay FUTA tax at a rate of 6.0% on the first $7,000 of wages paid to each employee annually. Employers typically receive a credit of up to 5.4% against their FUTA tax for timely payments into state unemployment systems, effectively reducing the federal rate to 0.6%. For 2025, New York is designated as a credit reduction state, which means employers in New York may face a higher effective FUTA tax rate, potentially 1.5% instead of the standard 0.6%.

New York State Employer Payroll Taxes

Beyond federal obligations, employers in New York are subject to specific state payroll taxes that fund state-level programs. These include contributions for State Unemployment Insurance, Disability Benefits Law, Paid Family Leave, and in certain areas, the Metropolitan Commuter Transportation Mobility Tax.

New York State Unemployment Insurance (SUI) provides temporary financial assistance to eligible workers who lose their jobs through no fault of their own. Employers pay SUI contributions, and the specific tax rate is determined by an experience rating system. This system considers factors such as the employer’s history of unemployment claims, meaning businesses with more former employees claiming benefits may have a higher rate. For 2025, the taxable wage base for SUI in New York is $12,800, and new employers are typically assigned a rate of 4.1%, while overall rates can range from a low of 2.1% to a high of 9.9%.

The New York Disability Benefits Law (DBL) requires most private employers to provide short-term disability insurance coverage for employees who become unable to work due to non-work-related illness or injury. While employers are responsible for securing this coverage, they are permitted to collect a small contribution from employees to help offset the cost. This insurance provides partial wage replacement during periods of temporary disability.

New York’s Paid Family Leave (PFL) program, which is often integrated with DBL coverage, offers paid time off for employees to bond with a new child, care for a family member with a serious health condition, or address needs arising from a family member’s military deployment. PFL is funded entirely through employee payroll deductions. Employers are responsible for collecting these contributions and remitting them to the state or their insurance carrier.

The Metropolitan Commuter Transportation Mobility Tax (MCTMT), also known as the MTA Surcharge, applies to certain employers operating within the Metropolitan Commuter Transportation District (MCTD). This district includes New York City and surrounding counties. Employers are subject to this tax if their total payroll expenses within the MCTD exceed $312,500 in any calendar quarter. The MCTMT is calculated based on payroll expense, and its rates can vary depending on the specific zone and the employer’s payroll size.

Understanding Taxable Wages and Rates

Understanding what constitutes taxable wages and how various rates are applied is key to determining payroll taxes. Taxable wages generally include an employee’s gross pay, encompassing salaries, hourly wages, bonuses, and commissions.

Different payroll taxes have distinct definitions of what wages are subject to taxation. While Medicare tax applies to all wages without limit, Social Security tax and federal unemployment tax (FUTA) have annual wage bases. These wage bases act as caps, meaning that once an employee’s annual earnings reach the specified amount, no further tax is assessed for that particular program on earnings above the limit for the remainder of the year. For 2025, the Social Security wage base is $176,100, the FUTA wage base is $7,000, and the New York State Unemployment Insurance (SUI) taxable wage base is $12,800.

Employer tax rates can vary, particularly for state-specific taxes. New York’s SUI rates are subject to an experience rating system, where an employer’s rate can fluctuate based on their history of unemployment claims. The Metropolitan Commuter Transportation Mobility Tax (MCTMT) also features tiered rates that depend on the employer’s total payroll expense within the specified district.

Employer Reporting and Payment Obligations

Employers must fulfill specific reporting and payment obligations to both federal and state authorities. For federal payroll taxes, employers use specific forms to report their liabilities. Federal income tax withholding and FICA taxes are reported quarterly using Form 941, Employer’s Quarterly Federal Tax Return. This form details the wages paid, federal income tax withheld, and both the employer and employee shares of Social Security and Medicare taxes. Federal Unemployment Tax Act (FUTA) liabilities are reported annually on Form 940, Employer’s Annual Federal Unemployment Tax Return, typically due by January 31 of the following year.

Federal payroll tax payments are primarily made electronically through the Electronic Federal Tax Payment System (EFTPS). Employers generally follow either a monthly or semi-weekly deposit schedule, depending on their total tax liability.

New York State also has specific reporting and payment requirements for employer payroll taxes. The primary form for combined state obligations is Form NYS-45, Quarterly Combined Withholding, Wage Reporting, and Unemployment Insurance Return. This form is used to report state withholding taxes, unemployment insurance contributions, and details related to Disability Benefits Law and Paid Family Leave. Form NYS-45 is filed quarterly, with due dates typically falling on the last day of the month following the end of each quarter. New York State generally mandates electronic filing and payment for these payroll taxes.