How to Calculate New York City Tax - Payroll Software
New York City employers can save precious time and resources by using NY payroll software, Payroll Mate, to automatically calculate federal, New York State and New York City personal income taxes.
New York City has implemented a personal income tax rate change starting September 1, 2010. Method II, Exact Calculation Method, has changed. The new personal income tax rate change affects wages of $500,000.00 and more. Supplemental wages (bonuses, commissions, overtime pay, etc.) withholding rate for will be 4.75% effective September 1, 2010.
Employers using the wage bracket tables (Method I) or dollar to dollar withholding tables will continue to use the New York City tables contained in Publication NYS-50-T. The exact calculation method (Method II) tables have changed and are included in NYS-50-T.2 replacing pages T-39, T-40 and T-40-A in NYS-50-T.
The New York State personal income tax rates, Yonkers resident personal income surcharge tax rate, and Yonkers nonresident earnings tax rate have not changed. Employers should continue to use the methods in Publications NYS-
50-T and NYS-50-T.1 to determine the amounts to be withheld for these taxes.
Steps for computing the amount of tax to be withheld using Method II Exact Calculation Method and tax tables published in NYS-50-T.2.
New York City Method II Exact Calculation Method Example
Weekly Payroll, $1000 gross wages, single, 1 exemption
1. $115.40 for single, weekly payroll, 1 exemption. $1000.00 wages - $115.40 = $884.60 net wages
2. Single, weekly payroll. Look up $884.60. $884.60 - $481.00 = $403.60
3. $403.60 x.0390 = $15.74.
4. $15.74 + $14.15 = $29.89. Withhold this amount.
Find detailed information and personal income tax rate tables online at the New York State Department of Taxation and Finance website or see Publication NYS-50-T, Publication NYS-50-T.1 or Publication NYS-50-T.2.
Employers required to withhold New York City personal income tax may find that tax rate changes complicate the payroll process, consume time and energy. A practical New York City payroll solution would be to utilize payroll software. Payroll software which automatically updates tax tables and automatically computes withholdings would be an invaluable asset to any company. Feel peace of mind computations, payroll reports and tax forms (federal and state) are correct.
With up to date tax tables this comprehensive payroll program is an inexpensive solution to all small business owner's payroll situations.
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