Quick answer: New York employers must withhold state income tax (and New York City or Yonkers tax where it applies), pay state unemployment insurance, carry disability and Paid Family Leave coverage, and carry workers' compensation insurance. Withholding is remitted on a schedule based on how much you withhold, and most of it is reported quarterly on Form NYS-45. The Metropolitan Commuter Transportation Mobility Tax (MCTMT) applies only in the New York City metropolitan commuter district, not in Central New York.
Payroll is where small businesses most often get into trouble with the state, not because the rules are mysterious, but because there are several of them, each with its own agency and calendar. Here is the New York side, laid out in one place.
State income tax withholding
Every employer with employees working in New York must register for withholding and withhold New York State income tax from wages. Employees complete Form IT-2104, New York's withholding certificate, which is separate from the federal W-4. If an employee does not give you an IT-2104, you generally withhold based on the federal W-4 information or as single with no allowances, following the department's instructions.
If an employee lives in New York City or Yonkers, local withholding applies as well. For an upstate business whose employees all live and work locally, it rarely comes up.
When to deposit: New York's withholding deposit schedule follows your federal deposit schedule in large part. If you withhold more than a threshold amount in a period, you must remit within a few business days of payday; smaller employers remit with the quarterly return. The Tax Department's withholding tax guide (Publication NYS-50) lays out the current rules.
The NYS-45 quarterly return
Form NYS-45 is New York's combined quarterly return. It covers three things at once:
- Withholding tax reconciliation for the quarter,
- Unemployment insurance wages and contributions, and
- Quarterly wage reporting for each employee.
It is due by the last day of the month after each calendar quarter: April 30, July 31, October 31, and January 31. The fourth-quarter return also serves as the annual reconciliation. New York requires most employers or their payroll providers to file it electronically.
Unemployment insurance
New York employers pay state unemployment insurance (UI) contributions on each employee's wages up to an annual wage base, which the Department of Labor adjusts each year. Your contribution rate depends on your experience: new employers start at a standard rate, and over time your rate moves up or down based on layoffs and benefit claims charged to your account.
You register with the Department of Labor when you first pay wages over a minimal amount in a quarter. UI is entirely an employer cost in New York; you do not withhold it from employees.
New York also bills a small Re-employment Service Fund surcharge on taxable wages, reported on the NYS-45. And because New York borrowed from the federal government for unemployment benefits in recent years, employers have at times faced reduced credits on their federal unemployment tax (FUTA). Check each year whether a credit reduction applies.
Disability and Paid Family Leave
New York requires most private employers to carry:
- Disability benefits insurance (DBL), which pays partial wages to employees who are off work for an illness or injury that did not happen on the job.
- Paid Family Leave (PFL), which provides paid time off to bond with a new child, care for a seriously ill family member, or handle certain military family needs.
Coverage is usually purchased through an insurance carrier, often bundled together. Employers may collect employee contributions toward both through payroll deductions, within limits the state sets each year. The PFL contribution rate and cap are published annually by the state, so update your payroll settings each January.
Workers' compensation
Workers' compensation insurance is required for almost every New York employer, including those with only part-time employees. It is overseen by the Workers' Compensation Board, not the Tax Department, and penalties for operating without coverage are significant. It is not a payroll tax as such, but premiums are generally based on payroll, so your payroll records drive the cost.
MCTMT: a downstate tax, not a Central New York one
The Metropolitan Commuter Transportation Mobility Tax applies to employers and self-employed individuals with payroll or earnings in the Metropolitan Commuter Transportation District: New York City and the counties of Nassau, Suffolk, Westchester, Rockland, Orange, Putnam, and Dutchess. Employers located in Onondaga, Oswego, Madison, Cayuga, Cortland, or Oneida counties do not pay it on payroll for work done here. If you have employees working in the district, though, it can apply to that payroll.
Other New York employer requirements
Beyond the taxes, a few rules come up repeatedly:
- New hire reporting to the state within 20 days of hire.
- Wage Theft Prevention Act notices given at hire, stating the pay rate, payday, and other details.
- Minimum wage, which is higher in New York City, Long Island, and Westchester than in the rest of the state.
- Paid sick leave, with the number of hours required depending on employer size, and paid prenatal leave.
- Pay frequency rules, including weekly pay for most manual workers.
If you are hiring for the first time, our article on setting up payroll for your first employee in New York walks through the setup step by step. Many small business owners prefer to have someone else run payroll and file these returns; that is part of our bookkeeping and payroll services.
Frequently asked questions
When is the NYS-45 due?
The NYS-45 is due on the last day of the month following each calendar quarter: April 30, July 31, October 31, and January 31. If the date falls on a weekend or holiday, it moves to the next business day.
Do I withhold New York tax for an employee who lives in another state?
If the employee works in New York, you generally withhold New York tax on wages for work performed here. If they work entirely outside New York, you may need to register and withhold in their work state instead. Mixed situations need a closer look.
Does my Syracuse business have to pay the MCTMT?
No, not for employees working in Central New York. The MCTMT applies only to payroll and self-employment earnings in the twelve-county Metropolitan Commuter Transportation District, which covers New York City and seven nearby counties.
Can I deduct Paid Family Leave premiums from employee pay?
Yes. New York allows employers to fund Paid Family Leave through employee payroll deductions, up to the rate and annual cap set by the state each year. Disability benefits contributions may also be collected from employees within a set limit.
This article is general information for 2026, not tax or legal advice for your situation. Tax rules and figures change; confirm current amounts with the IRS, New York State, or your accountant before acting.
Related service: New York State Tax