Changes to New York City Withholding Tax Computation Rules go into effect September 1, 2010

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Recent legislation has introduced changes to the New York City (NYC) personal income tax rates of employees with taxable income of more than $500,000 who are subject to withholding.  New rules for computing the amount of personal income tax withheld are effective for payrolls completed on or after September 1, 2010.  These changes will only affect New York City. The New York State and Yonkers tax rates have not changed.

NYC Regular Withholding Rates

For regular wages, there are revised computation rules for determining the amount of New York City personal income tax to be withheld.  For the three different methods of calculation, the rules are as follows:

• For Method I, Wage bracket tables: Continue to use the New York City tables contained in Publication NYS-50-T.

• For Method II, Exact Calculation Method:  Use the revised exact calculation method(s) in Publication NYS-50-T.2.

• For dollar-to-dollar withholding tables: Continue to use the dollar-to-dollar withholding tables for New York City contained in Publication NYS-50-T.

NYC Supplemental Withholding Rate

For any supplemental wages (bonuses, commissions, overtime pay, etc.) paid to New York City employees, the withholding tax percentage will also increase to 4.75% from 4.0% on September 1st. 

As New York State and Yonkers are not affected by the new rules, the calculation methods in Publications NYS-50-T and NYS-50-T.1 should continue to be used to determine withholding for these taxes. 

Learn more at www.tax.state.ny.us or contact the NY Department of Taxation and Finance at 518-485-6654 or 877-698-2910 for further information.

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