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The New York Department of Taxation and Finance has published revised income tax withholding tables and methods that reflect legislation signed into law on April 19, 2021 by Governor Andrew Cuomo (S.2509-C/A.3009-C) that increased the top personal income tax rate effective retroactively to January 1, 2021.

The income tax withholding changes, which apply to wages paid on and after July 1, 2021, will result in revised withholding computations of New York State and Yonkers resident personal income tax for employees with annual taxable income of:

• More than $2,155,350, and who are married filing jointly or a qualified widow(er)
• More than $1,077,550, and who are single or married filing separately
• More than $1,616,450, and who are head of household

Supplemental withholding rates

Effective July 1, 2021, the following withholding rates apply to supplemental wages (bonuses, commissions, overtime pay, sales awards, etc.):

New York State … … … … … … … … … … … … … … 13.78% (up from 9.62%)

Yonkers (resident) … … … … … … … … … … … … … . 2.30815% (up from 1.61135%)

Yonkers (nonresident) … … … … … … … … … … … … 0.50% (unchanged)

New York City (not affected by legislation) … … … … … 4.25% (unchanged)

Background

As previously reported (see EY Tax Alert 2021-0806), the New York State fiscal year budget, as enacted under S.2509-C/A 3009-C, provides that for tax years beginning on or after January 1, 2021, the top state personal income tax rate increases from 8.82% to new rates ranging from 9.65% to 10.90%. These top tax rates, which are extended through 2027, are as follows:

• 9.65% for income over $2,155,350 (married filing jointly); $1,616,450 (filing as head of household) and $1,077,550 (single/married filing separately) up to $5 million

• 10.30% for income over $5 million to $25 million (for all filing statuses)
• 10.90% for income over $25 million (for all filing statuses)

For tax years beginning on or after 2028, the top state personal income tax rate reverts to the previous 8.82% for income over $2,155,350 (married filing jointly); $1,616,450 (filing as head of household) and $1,077,550 (single/married filing separately).

The penalty for underpayment of estimated income tax will not apply to any installments due on or before September 15, 2021, if the underpayment results from the new income tax rates and the taxpayer makes the payments by September 15, 2021.

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