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The New York Department of Taxation and Finance has released revised wage bracket and percentage method income tax withholding tables for the state of New York and City of Yonkers effective with wages paid on or after January 1, 2017.

Publication NYS-50-T-NYS, New York State Withholding Tax Tables and Methods

Publication NYS-50-T-Y, Yonkers Withholding Tax Tables and Methods

The 2017 New York State and City of Yonkers personal income tax rate schedules have been revised to reflect the cost of living adjustment required under New York tax law. Accordingly, effective for payrolls made on or after January 1, 2017, employers must use the revised withholding tax tables and methods to compute the amount of New York State and City of Yonkers taxes to be withheld from employees.

The Yonkers nonresident earnings tax rate has not changed.

Supplemental withholding rates

Effective January 1, 2017, if you pay supplemental wages (bonuses, commissions, overtime pay, sales awards, etc.), the following withholding rates apply:

New York State … 9.62% (unchanged)

New York City … 4.25% (unchanged)

Yonkers Resident … 1.61135% (changed)

Yonkers Nonresident … 0.50% (unchanged)

If you pay supplemental wages (bonuses, commissions, overtime pay, sales awards, etc.) with regular wages but do not specify the amount of each, withhold income tax as if the total were a single payment for a regular payroll period.

If you pay supplemental wages separately (or combine them in a single payment and specify the amount of each), the income tax withholding method depends partly on whether or not you withhold income tax from your employee's regular wages:

— If you withhold income tax from an employee's regular wages, you can use one of the following methods for the supplemental wages:

a. Withhold at the supplemental rates
b. Add the supplemental and regular wages for the most recent payroll period this year. Then figure the income tax withholding as if the total were a single payment. Subtract the tax already withheld from the regular wages. Withhold the remaining tax from the supplemental wages.

— If you did not withhold income tax from the employee's regular wages, use method b. (This would occur, for example, when the value of the employee's withholding allowances claimed on the Form W-4 is more than the wages.)

Also see federal Publication 15, Circular E, for a list of other payments that may be considered supplemental wages.

Form IT-2104, Employee's Withholding Allowance Certificate, revised for 2017

The updated Publications NYS-50-T-NYS and NYS-50-T-Y indicate that New York State Form IT-2104, Employee's Withholding Allowance Certificate, for use by New York State and City of Yonkers employers has been revised effective January 1, 2017 to account for the cost of living adjustments to the personal income tax rate schedules.

However, the revised form has not yet been posted to the Tax Department website. Once posted, the form will be available here.

The revised withholding tables and methods in the publications should ensure that the proper amount of tax is withheld for 2017. However, employers should encourage employees who completed a Form IT-2104 prior to January 1, 2017, using the worksheet to compute withholding allowances, or the charts in Part 4 or Part 5 to enter an additional dollar amount of New York State withholding on line 3, to complete a revised Form IT-2104.

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