New York State’s Department of Taxation and Finance has opened registration for its new optional payroll tax system to help employers avoid the impact of President Trump’s federal tax legislation.
The new system, which is known as the employer compensation expense programme, allows businesses to pay employees' taxes on their behalf, before claiming back the full amount. The tax is intended to help keep New Yorkers' taxes down following the recent federal tax overhaul.
Governor Andrew Cuomo restructured the state's tax code this year to help New Yorkers claim the full state and local tax deduction, which was capped at US$10,000 in the new federal tax legislation passed last December. The provision particularly affects high-tax states such as New York, where residents claimed an average of US$22,168 in state and local tax deductions, according to Bizjournals.
But some leaders of local business associations have claimed their members are not very interested in the new scheme. Instead they are more concerned about how they would explain the changes to their employees, who could, in theory, see their wages drop – despite the fact that the state's budget director has said that phasing in the tax would avoid any reductions in take-home pay.
The optional tax is being phased in over three years. In the first year, the tax rate will be 1.5%, rising to 5% in 2021 and after, based on incomes of more than US$40,000. Employers would have to opt in annually to participate, and have until 1 December this year to do so.
Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.
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New York State’s Department of Taxation and Finance has opened registration for its new optional payroll tax system to help employers avoid the impact of President Trump’s federal tax legislation.
The new system, which is known as the employer compensation expense programme, allows businesses to pay employees' taxes on their behalf, before claiming back the full amount. The tax is intended to help keep New Yorkers' taxes down following the recent federal tax overhaul.
Governor Andrew Cuomo restructured the state's tax code this year to help New Yorkers claim the full state and local tax deduction, which was capped at US$10,000 in the new federal tax legislation passed last December. The provision particularly affects high-tax states such as New York, where residents claimed an average of US$22,168 in state and local tax deductions, according to Bizjournals.
But some leaders of local business associations have claimed their members are not very interested in the new scheme. Instead they are more concerned about how they would explain the changes to their employees, who could, in theory, see their wages drop – despite the fact that the state's budget director has said that phasing in the tax would avoid any reductions in take-home pay.
The optional tax is being phased in over three years. In the first year, the tax rate will be 1.5%, rising to 5% in 2021 and after, based on incomes of more than US$40,000. Employers would have to opt in annually to participate, and have until 1 December this year to do so.
Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.
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