New York runs three overlapping payroll tax systems — state, city, and metro area — each with its own rates, brackets, and filing requirements. Add NYS Paid Family Leave, state disability insurance, and the MCTMT, and you have one of the most administratively complex payroll environments in the country. Paylon handles every layer automatically.
New York employees can face withholding from three separate jurisdictions simultaneously: New York State, New York City (if applicable), and Yonkers (if applicable). Here's the complete withholding picture:
| Tax | Rate | Who Pays | Notes |
|---|---|---|---|
| NY State Income Tax | 4% – 10.9% | Employee | 9 brackets; top rate applies to income over $25M (married) |
| NYC Income Tax | 3.078% – 3.876% | Employee | Applies only to NYC residents; 4 brackets |
| NYS Paid Family Leave (PFL) | 0.388% (2026) | Employee | Capped at $333.25/year; funds 12 weeks of paid leave |
| NY State Disability (SDI) | 0.5% up to $0.60/week | Employee | Employer covers remainder; mandatory short-term disability coverage |
| MCTMT | 0.34% | Employer | Metropolitan Commuter Transportation Mobility Tax; applies in NYC metro area on payroll over $312,500/quarter |
| SUI (Employer) | 0.6% – 7.9% | Employer | New employer rate: 4.1%; wage base $12,500 (2026) |
| Federal (FICA + FIT) | Standard federal rates | Both | Social Security, Medicare, federal income tax — same as all states |
New York's compliance checklist is longer than most states — and the penalties for missing items are steep:
New York City adds a second income tax layer for employees who live in the five boroughs. The complication: you must track whether each employee is a NYC resident, not just where they work. An employee who works at your Manhattan office but lives in New Jersey owes no NYC income tax. An employee who works remotely from Brooklyn owes NYC tax even if they never set foot in your office.
Get this wrong and you'll either over-withhold (causing employee complaints and W-2 corrections) or under-withhold (leaving employees with unexpected tax bills and potential penalties). Paylon tracks residency at the employee level and applies the correct withholding method for every paycheck.
New York announces the PFL withholding rate and benefit cap each September for the following year. The rate has changed every year since the program launched in 2018. Teams running payroll manually must remember to update their withholding percentage on January 1 — or they'll either over-collect from employees (creating refund obligations) or under-fund the coverage.
Paylon applies the correct PFL rate on the effective date automatically and enforces the annual cap so employees are never over-withheld for PFL once they hit the ceiling.
Paylon tracks each employee's residence jurisdiction — NYC, Yonkers, or neither — and applies the correct additional withholding rates automatically. Works correctly for remote employees whose residence and work locations differ.
NYS announces new PFL rates each fall. Paylon applies the updated rate on January 1 without any manual configuration, and enforces the annual cap so employees are never over-withheld for PFL coverage.
Quarterly withholding and unemployment data is compiled automatically from each payroll run, matching the format required for NYS-45 submissions — no double-entry into the state portal.
New York's minimum wage varies by location and employer size. As of January 2026: New York City, Long Island, and Westchester County are at $16.50/hour statewide (with NYC at $16.00/hour for some workers under prior schedules). The rest of New York State is at $15.50/hour. New York also has higher minimums for certain fast food and healthcare workers.
For employers with workers in multiple NY regions, tracking the applicable minimum for each employee's work location is a compliance requirement, not a suggestion. A manual worker paid below the regional minimum is a wage theft violation under the WTPA.
The Metropolitan Commuter Transportation Mobility Tax applies to employers in the New York City metro area (NYC, Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess, and Westchester counties) whose payroll exceeds $312,500 per quarter. The rate is 0.34% of payroll above that threshold.
This is an employer-paid tax — not withheld from employees — but it shows up on quarterly payroll filings and must be tracked separately from SUI. Paylon calculates MCTMT liability automatically for affected employers and includes it in quarterly reporting.
State tax, NYC surcharge, PFL, SDI, MCTMT — all calculated and filed automatically. Start by seeing what NY payroll actually costs.
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