State playbook - New York

Matchbook, tuned for New York's triple-stack income tax, DBL/PFL, and NYC commuter law.

New York amplifies the Section 125 and Section 132(f) savings stack more than almost any other state - residents of New York City and Yonkers stack a 10.9% top state rate on top of 3.876% NYC or a Yonkers resident surcharge, plus MCTMT in the 12-county MCTD, plus DBL and PFL premium coordination. The result is pre-tax elections worth 40-50% per dollar for high earners, and an employer ROI calculation that has to model local tax, commuter compliance, and PFL premium offsets together.

What Matchbook ships for New York Tax profile
Map of the United States with New York highlighted
Tax mechanics

Payroll tax in New York

State income tax

Applies

New York has a progressive personal income tax with 9 brackets from 4% to 10.9% (top rate on single income over $25M and joint income over $25M). New York City residents add a local income tax with a top marginal rate of 3.876%. Yonkers residents pay a 16.75% surcharge on their NY state tax liability (effectively adding about 1.6-1.8 percentage points at top brackets); Yonkers non-residents working in Yonkers pay a 0.5% earnings tax. For a $150K NYC resident, a $3,300 healthcare FSA election saves roughly $1,470 (22% federal + 6.85% NY + 3.876% NYC + 7.65% FICA) versus about $1,050 for the same employee in Florida. Matchbook calibrates under-election guardrails wider for New York - the marginal cost of forfeiture is the same but the savings-per-dollar is materially higher.

New York State Unemployment Insurance

Wage base $12,800 (2025); indexed to 16% of the state average annual wage

Rate range: Total UI rate range 2.025%-9.825% in 2025 including the Re-employment Services Fund; new employer rate 4.025%

New York's $12,800 SUI wage base is higher than Florida's $7,000 but still well below most salaried pay. Section 125 salary reductions produce meaningful UI savings only for part-time, seasonal, or lower-wage workers. For NYC employers, Matchbook models MCTMT (Metropolitan Commuter Transportation Mobility Tax) impact separately - payroll over $312,500 per quarter in zone 1 (NYC five boroughs) triggers rates up to 0.60%, and Section 125 reductions lower the MCTMT base. This is a frequently missed employer lever for NYC-heavy payrolls.

Employer FICA

7.65% / 1.45% split

Employer FICA is 7.65% on wages up to the Social Security wage base ($176,100 in 2025; projected about $183,600 in 2026) and 1.45% above it. NY Paid Family Leave premium (0.388% of wages, capped at about $354 per employee in 2025) is fully employee-funded via post-tax payroll deduction and is not offset by Section 125 reductions - Matchbook explicitly reconciles PFL premium lines separately from Section 125 savings so the employee's take-home math is correct.

Employer credits and levers

State and federal credits worth stacking

Credits that most broker ROI decks omit. Matchbook surfaces these in the employer report.

NY Employer-Provided Child Care Credit

New York State credit equal to the federal IRC Section 45F credit amount, effectively doubling the benefit for NY employers providing or sponsoring qualified childcare. Combined NY plus federal 2026 benefit can reach 80% of qualified childcare expenditures for small employers (40% federal + up to 40% NY state match on the same base).

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Excelsior Jobs Program

Refundable tax credits for targeted industries (manufacturing, R&D, financial services back-office, software, green economy) that create net new NY jobs. Includes a jobs credit (6.85% of gross wages), investment credit (2% of qualified investment), R&D credit (50% of federal R&D credit), and real property tax credit. Administered by ESD.

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Empire State Child Credit (employer context)

While primarily a household credit, the Empire State Child Credit reduces effective household marginal cost of dependent care for NY employees. 2023-2025 expansions increased per-child amounts up to $1,000 for children under 4 and $500 for ages 4-16. Matchbook factors this into DCFSA elect-versus-credit recommendations.

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Employer Compensation Expense Program (ECEP)

Optional NY employer-side payroll tax (currently 5% of payroll over $40K per employee) that lets NY workers convert disallowed SALT-capped state income tax into an employer deduction, with a matching wage credit for employees. Relevant for high-earning NYC payrolls evaluating SALT workaround structures.

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NY Musical and Theatrical Production Credit

25% refundable credit (up to $3M per production) for qualified production expenditures at Level 1 NY theaters outside NYC. Relevant for employers in arts, live events, and touring production companies with NY operations.

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NY R&D / Life Sciences Credits

Life Sciences R&D Tax Credit up to 15% (20% for small businesses) on qualified NY R&D expenses, capped at $500K per year per taxpayer for ten years. Stacks with Excelsior R&D credit.

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Household programs

State programs that change what your employees should elect

Matchbook coordinates these against DCFSA, FSA, and HSA elections at the household level.

Childcare subsidy

NY Child Care Assistance Program (CCAP)

Subsidized childcare for income-qualifying families. 2024-2025 expansions made all NY families under 85% State Median Income presumptively eligible in most districts; NYC implements CCAP through ACS. Family share capped at 1% of income over FPL.

Matchbook: CCAP reduces out-of-pocket dependent-care cost and lowers the correct DCFSA election. Matchbook screens NY employees against CCAP income thresholds before recommending DCFSA dollars.

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Preschool

NYC Pre-K for All and 3-K

Universal free full-day pre-K for NYC 4-year-olds and expanded 3-K for 3-year-olds, roughly 6 hours 20 minutes per day, school-year calendar. Wrap-around and summer care remain DCFSA-eligible.

Matchbook: For NYC families, the correct DCFSA election is wrap-around plus summer cost, not full-year full-day. Matchbook models the NYC Pre-K split explicitly, separately from upstate NY UPK.

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Preschool

NY Universal Pre-K (UPK - statewide)

Statewide UPK for 4-year-olds outside NYC, generally half-day or full-day depending on district. Half-day districts leave larger wrap-around DCFSA need than full-day NYC Pre-K for All.

Matchbook: Upstate NY UPK wrap-around calculation differs from NYC Pre-K for All. Matchbook's DCFSA recommender uses district-level UPK hours, not a statewide average.

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Children's health coverage

Child Health Plus (NY CHIP)

Subsidized children's health coverage available through NY State of Health. Free up to 222% FPL; sliding scale $9-$60 per child per month up to 400% FPL; full premium above. No asset test.

Matchbook: Employees declining family-tier dependent coverage on the employer plan should be screened against Child Health Plus thresholds before Matchbook defaults the recommendation.

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Adult health coverage

NY Medicaid and Essential Plan

Medicaid covers adults up to 138% FPL; the Essential Plan (NY's BHP) now covers up to 250% FPL with $0 monthly premium after 2024 expansion. Both available through NY State of Health.

Matchbook: NY's Essential Plan expansion to 250% FPL means many part-time and lower-wage NY employees may be better served declining employer coverage. Matchbook flags this explicitly in the NY open-enrollment flow - it is materially different from federal Marketplace math in non-BHP states.

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ACA Marketplace

NY State of Health (state exchange)

New York operates its own state-based Marketplace (not the federal FFM). 2026 open enrollment runs November 1, 2025 through January 31, 2026. Enhanced PTC expiration at end of 2025 raises 2026 premiums; NY's state subsidy program partially cushions the cliff.

Matchbook: If employer family coverage exceeds the 2026 affordability threshold of household income, Matchbook surfaces NY State of Health (not HealthCare.gov) as the dependent-subsidy path with the correct state subsidy overlay.

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Paid leave

NY Paid Family Leave (PFL)

Mandatory job-protected paid family leave: 12 weeks at 67% of AWW, capped at 67% of the NY statewide average weekly wage. Funded by employee post-tax payroll deduction (0.388% of wages in 2025, capped). Stacks with FMLA and NY DBL; cannot be taken concurrently with DBL for the same week.

Matchbook: NY PFL premium is employee-funded and post-tax, so it does not interact with Section 125 elections. However, Matchbook models PFL benefit coordination with short-term disability (NY DBL) and employer supplemental STD, which frequently overlap and can produce duplicate-coverage overpayments.

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Short-term disability

NY Disability Benefits Law (DBL)

Mandatory statutory short-term disability: 50% of AWW up to $170 per week for up to 26 weeks for non-work-related illness or injury. Can be employee- or employer-funded (employee contribution capped at 0.5% of wages up to $0.60 per week).

Matchbook: NY DBL's $170 per week cap is well below most NY salaries, so voluntary supplemental STD is almost always worth electing. Matchbook models DBL-plus-voluntary-STD replacement rates rather than treating DBL alone as adequate.

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Paid sick leave

NY Earned Safe and Sick Time Act (NYSESTA) and NYC ESSTA

Statewide NY paid sick leave: up to 56 hours per year for employers with 100+ workers, 40 hours for 5-99 workers (paid), and 40 hours unpaid for under-5. NYC ESSTA applies additional NYC-specific rules and posting requirements. Covers safe time for domestic violence, sexual assault, and stalking.

Matchbook: Matchbook's NY employee handbook integration checks that employer sick leave policy meets both NYSESTA and NYC ESSTA minimums where applicable, and flags jurisdictions where NYC ESSTA is stricter than state NYSESTA.

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Retirement and wealth

State-level retirement and wealth context

NY ABLE

New York's Section 529A program for disabled beneficiaries. 2025 contribution limit $19,000; employed beneficiaries may add up to $15,060 more. NY state income tax deduction up to $5,000 per contributor ($10,000 joint) for contributions to NY ABLE.

Matchbook: FSA or HSA dollars reimburse medical expenses; NY ABLE covers broader qualified disability expenses and produces a NY state income tax deduction. For NYC residents the combined state plus city deduction value is material - Matchbook routes eligible disability-related spend to NY ABLE first.

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NY 529 Direct Plan

NY state income tax deduction up to $5,000 per contributor ($10,000 joint) for contributions to the NY 529 Direct Plan (not to out-of-state 529 plans). At NY's top brackets plus NYC resident tax, the home-state deduction is worth roughly 14-15 cents per dollar contributed.

Matchbook: Unlike Florida, NY residents face a meaningful home-state 529 tilt. Matchbook over-weights NY 529 Direct Plan for NY-resident employees modeling college savings, and flags when out-of-state contributions forfeit the NY deduction.

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NY Secure Choice Savings Program

State-administered auto-IRA for NY employers with 10+ employees that do not offer a qualified retirement plan. Payroll-deduction Roth IRA with auto-enrollment at 3%. Employers must register or certify exemption.

Matchbook: Matchbook's NY employer onboarding flow checks Secure Choice registration status alongside retirement plan sponsorship and surfaces the registration path when no qualified plan exists.

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Section 132(f) commuter

Pre-tax commuter reality in New York

2025 IRC Section 132(f) cap is $325 per month for transit and $325 per month for qualified parking. LIRR and Metro-North monthly tickets from outer zones plus NYC subway commonly exceed the $325 transit cap; Matchbook models the cap overage as post-tax for those commuters.

Parking and state credits

Parking: Manhattan CBD parking routinely exceeds the $325 monthly cap; LIRR and Metro-North park-and-ride lots typically sit below. NYC commuters should generally allocate to transit first given higher effective marginal tax savings.

State credit: NYC Commuter Benefits Law (Local Law 53 of 2014): NYC employers with 20+ full-time NYC-based employees must offer pre-tax transit benefits under IRC Section 132(f). Enforced by NYC Department of Consumer and Worker Protection; penalties $100-$250 for first violation, up to $250 per subsequent 30-day noncompliance. Matchbook's NY employer compliance check surfaces this alongside Section 132(f) elections.

Disaster readiness

New York disaster-relief playbook

IRC Section 139 qualified disaster relief payments are not W-2 wages: no FICA, no FUTA, no federal or New York state income tax withholding, and the employer gets a full deduction. Triggered by a federal disaster declaration. Recent NY qualifying events include Hurricane Sandy (2012), Hurricane Ida (2021), winter storms, and flooding events across upstate and Long Island.

  • Pre-drafted Section 139 policy template so NY employers can disburse tax-free relief within 48 hours of a federal declaration - specifically sized for nor'easter, hurricane, and winter storm scenarios.
  • Post-storm Section 125 election-change guidance: a storm alone is not a listed change-in-status event under Treas. Reg. 1.125-4 - it qualifies only when it triggers a change in residence, employment, or cost-of-coverage.
  • FEMA Individual Assistance interaction: IRS Section 139 payments generally stack with FEMA IA, but Matchbook flags duplication risks in the disbursement log.
  • NY PFL and DBL coordination during declared disasters: NY PFL may be used for certain family-care disaster situations; DBL for employee illness or injury. Matchbook surfaces coordination rules when a disaster triggers leave claims.
  • NY-specific employer leave review: no statewide paid disaster leave statute exists, but NY employers with unionized workforces and NYC-based employers should check collective bargaining agreements and NYC Department of Consumer and Worker Protection guidance.
Matchbook for New York

What we ship specifically for New York employers

  • Triple-stack marginal tax calibration - NY state + NYC or Yonkers local tax layered into the Matchbook savings engine per employee ZIP, not a statewide average, so FSA and DCFSA under-election guardrails match actual household marginal rates.
  • MCTMT-aware employer ROI: the MCTD zone 1 payroll tax (up to 0.60%) is reduced by Section 125 salary reductions - Matchbook surfaces this as a distinct employer savings line for NYC-heavy payrolls.
  • NY PFL and DBL coordination module: reconcile employee post-tax PFL premium deductions and statutory DBL with voluntary supplemental STD elections to eliminate duplicate-coverage overpayments.
  • NYC Commuter Benefits Law compliance check for every NY employer with 20+ NYC-based employees - surfaces pre-tax transit offer status and DCWP penalty exposure.
  • Section 132(f) cap overage modeling for LIRR, Metro-North, and NJ Transit interstate commuters whose monthly passes exceed the $325 transit cap.
  • NY 529 Direct Plan home-state tilt in the college-savings recommender, contrasted with out-of-state 529 choices that forfeit the NY deduction.
  • NY Essential Plan and Child Health Plus screener at open enrollment: NY's BHP expansion to 250% FPL materially shifts the employer-versus-exchange recommendation for lower-wage NY households.
  • IRC Section 139 nor'easter and hurricane playbook template with NY-specific disbursement guidance and PFL/DBL coordination rules.
  • Benefits graph ingests: NY DOL UI rate notices, NY DTF credit allocations, ESD Excelsior certifications, WCB DBL/PFL filings, NY State of Health 2026 rate filings, NYC DCWP commuter-benefits enforcement actions, and FEMA DR numbers for NY.
Sources

Primary sources for this playbook

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