Employer's Guide to Unemployment Insurance Tax in New York

Everything employers need to know about paying unemployment insurance taxes in New York

If your small business has employees working in New York, you’ll need to pay New York unemployment insurance (UI) tax. The UI tax funds unemployment compensation programs for eligible employees. In New York, state UI tax is just one of several taxes that employers must pay. Other important employer taxes, not covered here, include federal UI tax, and state and federal withholding taxes.

Different states have different rules and rates for UI taxes. Here are the basic rules for New York’s UI tax.

Register With the Department of Labor

As a New York employer subject to UI tax, your small business must establish a New York UI tax account with the New York Department of Labor (DOL). You must register for a UI tax account as soon as your business is liable for UI taxes. Once you’ve registered, you’ll be issued a UI employer registration number.

You can register with the DOL either online or on paper. However, be aware that the DOL has been moving toward only accepting online registrations—so you should check the DOL website before submitting a registration on paper. To register online, go to the DOL’s Employer Registration webpage. To register on paper, complete Form NYS-100,New York State Employer Registration for Unemployment Insurance, Withholding, and Wage Reporting. Blank forms are available for download from the Employer Forms and Publications section of the DOL website. You can submit Form NYS-100 by regular mail or by fax.

It takes the DOL 4-6 weeks to process a registration and assign an account number. There is no fee to register your business with DOL.

Note: To establish your New York UI tax account, you’ll need a federal employer identification number (EIN). You can apply for an EIN at IRS.gov. Generally, if you apply online, you will receive your EIN immediately.

Rules for UI Tax Liability

As a New York for-profit employer, you become liable for state UI taxes at either of the following times:

  • the first day of the calendar quarter in which you pay remuneration (wages) of $300 or more, or
  • the day you acquire any or all of a business of a liable employer.

Note that these rules are different from those that apply for liability under the Federal Unemployment Tax Act (FUTA). Moreover, different rules, not covered here, apply to agricultural (farm) workers, domestic (in-home) workers, and employees of some (but not all) non-profit organizations.

One piece of good news is that state UI tax payments generally can be credited against your FUTA taxes.

Wage Base and Tax Rates

UI tax is paid on each employee’s wages up to a maximum annual amount. That amount, known as the taxable wage base, currently is set to increase by either $200 or $300 each year at least until 2026. In the next few years, it will approach and then exceed $11,000.

The state UI tax rate for new employers, also known as the standard beginning tax rate, also can change from one year to the next. The beginning rate actually is the sum of three other rates: the normal contribution rate, the subsidiary contribution rate, and the Re-employment Service Fund rate. In recent years, the overall rate for new employers has been around 4%. Established employers are subject to a lower or higher rate than new employers depending on an “experience rating.” This means, among other things, whether your business has ever had any employees who made claims for state unemployment benefits.

File Quarterly UI Tax Reports and Payments

Unlike other states, New York combines its UI tax and withholding tax reporting and payments. Reports and payments are due the last day of the month following the end of the quarter, as follows:

Quarter

Due Date

January 1 to March 31

April 30

April 1 to June 30

July 31

July 1 to September 30

October 31

October 1 to December 31

January 31

When the due date falls on a Saturday, Sunday, or legal holiday, you are permitted to file on the next business day.

You must file your reports electronically. More specifically, you have the following three electronic filing options:

  • Web File
  • Web Upload, or
  • FSET-compatible software (commercially available software that allows you to use the Federal/State Employment Taxes (FSET) program to file your quarterly return information).

For more information about each of these methods, check the tax filing methods page on the New York Department of Taxation and Finance (DOTF) website. In some cases, you can file a report online but then print out a payment voucher and pay by paper check.

As a New York employer, you must file reporting forms even if you had no payroll in the quarter. Late payment of contributions results in interest assessments and may increase your UI tax rate in future years.

Post a Notice (Poster)

You are required to post a notice (poster) regarding state unemployment claims in a conspicuous location in each workplace. The poster states that employees of the business are covered by New York’s UI law and provides very basic information on how to file an application for UI benefits. The DOL should send you the required notice when you first register your business with them.

Do Not Misclassify Employees as Independent Contractors

Employers who use independent contractors rather than hiring employees are not subject to the UI tax. However, it’s important that you do not misclassify an employee as an independent contractor. If you do misclassify an employee, you could be subject to penalties or fines.

Using Payroll Service Companies

You may decide that it’s easiest to hand over responsibility for payroll, including UI taxes, to an outside payroll service. If so, keep in mind that your business, or even you personally, may still be held directly responsible for mistakes made by an outside payroll company.

Additional Information

This article touches on only the most basic elements of New York UI taxes. Avoid possible penalties for making mistakes by checking both the IRS and DOL websites for the latest information. In addition to state UI tax, employers have other responsibilities not covered in this article such as federal UI tax, state and federal withholding taxes, and required reporting of new hires. You can get more information about other small business tax issues in other articles here on Nolo.com.

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