Month-end close: payroll tax in New York

New York reports withholding, wages and unemployment insurance together on one quarterly return, and has three more employer items most states don't: DBL, PFL and the MCTMT.

This is part of the payroll checklist. New York payroll is reported to the Tax Department and the Department of Labor (DOL) together, on one quarterly return, the NYS-45 [5]. Do the federal steps first. New York's payroll quarters are calendar quarters, but its sales tax quarters aren't, so a New York client has two quarter-end calendars.

Rate. Income tax is withheld from the Tax Department's 2026 tables. A new employer's 2026 unemployment rate is 4.1%, on the first $17,600 paid to each employee.

Filing. The NYS-45 every quarter, even with no payroll. Withholding under $700 in the quarter is paid with it. Once it reaches $700, file Form NYS-1 and pay within 5 business days of the payroll that took it there, or 3 business days for a 3-day filer.

Due. The NYS-45 on April 30, July 31, October 31 and January 31.

The trap. The employer must have disability (DBL) and Paid Family Leave (PFL) coverage through an insurer with no lapse, even when switching. An employer with more than $312,500 of payroll expense in a quarter in the New York City area also owes the MCTMT.

The month-end steps

1. State income tax withholding. New York income tax is withheld from wages. Work it out with the Tax Department's 2026 withholding tables, Publication NYS-50-T-NYS, effective January 1 to December 31, 2026. Supplemental wages, such as bonuses, can be withheld at the supplemental rate of 11.70% [1]. How it's paid depends on how much has built up in the calendar quarter [2] [3]:
   1. Under $700 in the quarter: pay it with the quarterly NYS-45.
   2. Once it reaches $700: file Form NYS-1 and pay within 5 business days of the payroll that took it to $700, or within 3 business days for a 3-day filer.
   3. Which one the client is: a 5-day filer withheld less than $15,000 in the calendar year before last, and a 3-day filer withheld $15,000 or more. New employers start as 5-day filers until told otherwise.

Withholding returns must be filed and paid electronically; paper filers may be penalized [2]. Done when the New York withholding liability account is at zero after the month's NYS-1 payments, or equals withholding not yet due.

2. Unemployment insurance. Take the client's rate from its UI rate notice, which the DOL mails each year from mid-February [4]. For reference, a new employer's 2026 rate is 4.1%: 4.025% UI plus a 0.075% Re-employment Services Fund rate, which applies to every contributing account [4]. For 2026, the tax applies to the first $17,600 paid to each employee [5]. Late payment brings interest and may raise the client's UI rate in later years [5]. Done when the UI liability account equals the month's taxable wages times the notice's rate.
3. The quarterly return, the NYS-45. It combines withholding, wage reporting and unemployment insurance, and it's due April 30, July 31, October 31 and January 31 for the quarters ending March, June, September and December [5] [3]. A due date on a weekend or holiday moves to the next business day [3]. Every employer files it, even with no payroll that quarter [5]. Done when the NYS-45's wages tie to the quarter's payroll register, its withholding to the quarter's NYS-1 payments plus any amount paid with the return, and its UI to taxable wages times the notice's rate.
4. Owner and officer wages. If the client is a corporation that pays its officers, including the owner of an S corporation, ask its accountant how their pay is treated for these taxes before you run payroll. Done when the accountant's answer is on file.
5. Other state payroll items. Three more apply in New York:
   1. Disability benefits (DBL) and Paid Family Leave (PFL) coverage. The employer must have coverage for its employees through an insurer, with no lapse, even when switching insurers [6]. It may collect part of the cost from employees, but doesn't have to. For DBL, the employee's share is 0.5% of wages, up to 60 cents a week [7]. For PFL in 2026, it's 0.432% of gross wages each pay period, up to $411.91 for the year [8]. If the client deducts these, tie each deduction account to the insurer's bill.
   2. The Metropolitan Commuter Transportation Mobility Tax (MCTMT). It applies to an employer with more than $312,500 of payroll expense in a calendar quarter for employees in the Metropolitan Commuter Transportation District. Zone 1 is the five New York City counties, and Zone 2 is Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess and Westchester [9].

These rates apply to quarters beginning on or after July 1, 2025 [9]. Done when the DBL and PFL deduction accounts tie to the insurer's bill, and, for an MCTD employer over the threshold, the MCTMT for the quarter is accrued at its zone's rate.