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Which taxes do I need to withhold?

As an employer you’re obligated to withhold and pay certain taxes on behalf of employees:

Federal Income Tax

Employers generally must withhold federal income tax from employees' wages. This is based on IRS withholding tables, and an employee’s taxable compensation and marital status, number of allowances, and the exemptions that the employee reports on Form W-4.

State Income Tax

New York state has a progressive income tax system with rates ranging from 4% to 8.82% depending on taxpayers’ income level and filing status. (*)

City Income Tax

New York City imposes its own local income tax system on top of the state one. New York City’s income tax system is also progressive and rates range from 3.078% to 3.876%. (*)

Social Security and Medicare (FICA)

FICA is comprised of taxes for Social Security (referred to as Old Age, Survivors, and Disability Insurance, or OASDI) and Medicare (or Hospital Insurance). Both employee and employer contribute to FICA, but employers are responsible for the entire tax.

Federal Unemployment Tax (FUTA)

Employees who lose their jobs are entitled to payments through the Federal Unemployment Tax Act, together with state unemployment insurance programs. This tax cannot be deducted from employee wages, because it is solely an employer tax.

In 2018 employers must pay a tax rate of 6% on the first $7,000 that each employee earns.

State Unemployment Insurance (SUI)

Employers pay SUI tax based on how many workers are employed and at a rate the state has determined. This tax is closely linked to FUTA, though compensation benefits are paid from the state fund. Every state has limits on the amount of taxable compensation for SUI.

An employer's New York State Unemployment Insurance contribution rate is divided into two parts - the normal, and the subsidiary, contribution. For 2018, the new employer normal contribution rate is 2.9%. The subsidiary part of the rate can vary. (*)

State Disability

Some states mandate that either an employer or employee make a contribution to its disability program, providing benefits to employees who lose time from work due to illness, accident, or non-employment-related disease. How much is paid by employers and workers varies from state to state.

NY: 0.50% to maximum of $0.60 per week. This is withheld from the employee’s salary. (*)

State family leave insurance (SFLI)

New York is one of a few states that requires employers to provide family leave benefits coverage to employees for qualified leave. Employers should contact their current SDI carrier to learn more about adding Paid Family Leave coverage. You can choose to deduct up to $85.56 annually from your employees' wages in order to pay for Family Leave Insurance. (*)

(*) This is for New York employers only. Other states and cities have different rates. 

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