This rule repeals and adds new Appendixes 10 and 10-A of Title 20 NYCRR, the New York State and City of Yonkers withholding tables and other methods, respectively. The amendments to Appendixes 10 and 10-A reflect the incremental decrease in New York State personal income tax effected by Part TT of Chapter 60 of the Laws of 2016, beginning in tax year 2018. The new withholding tables and other methods also reflect the temporary expansion of the top brackets and rates of New York State personal income tax effected by Part A of Chapter 59 of the Laws of 2021 and provide a third withholding method to better accommodate the new brackets and rates. Changes to the City of Yonkers withholding tables and other methods were necessary because the City of Yonkers income tax surcharge is a specified percentage of New York State tax. The rule also updates 20 NYCRR sections 171.4 and 251.1, relating to withholding for supplemental wages, to reflect the new brackets and rates and the additional withholding method.

The rule applies to wages and other compensation subject to withholding paid on or after January 1, 2022.

1. Statutory authority: Tax Law, section 171, subdivision First, generally authorizes the Commissioner of Taxation and Finance to promulgate regulations; section 671(a)(1) provides that the method of determining the amounts of New York State personal income tax to be withheld will be prescribed by regulations promulgated by the Commissioner; section 697(a) provides the authority for the Commissioner to make such rules and regulations as are necessary to enforce the personal income tax; Tax Law section 1329(a) and section 15-105 of the Code of the City of Yonkers provide that the City of Yonkers income tax surcharge shall be withheld in the same manner and form as that required for State income tax; Tax Law section 1332(a) and section 15-108(a) of the Code of the City of Yonkers provide that the income tax surcharge shall be administered and collected by the Commissioner in the same manner as the tax imposed by Article 22 of the Tax Law; Tax Law section 1321(a) authorizes the City of Yonkers to adopt and amend local laws imposing a city income tax surcharge to be administered, collected and distributed by the Commissioner; section 15-111 of the Code of the City of Yonkers provides that the City of Yonkers income tax surcharge shall be a specified percentage of net state tax. Part TT of Chapter 60 the Laws of 2016 effects incremental decreases in the New York State personal income tax rates beginning in tax year 2018. Part A of Chapter 59 of the Laws of 2021 temporarily expands the top brackets and rates of personal income tax. Amendments to the withholding tax tables and methods for both New York State and the City of Yonkers were required to implement the statutory changes effected by Part TT and Part A.

2. Legislative objectives: The rule repeals and replaces Appendixes 10 and 10-A, the New York State and City of Yonkers withholding tables and other methods, respectively, to implement changes required by Part TT of Chapter 60 of the Laws of 2016 and Part A of Chapter 59 of the Laws of 2021. The rule implements revised New York State and City of Yonkers withholding tables and other methods to reflect the incremental decrease in New York State personal income tax rates effected by Part TT of Chapter 60, beginning in tax year 2018. The new withholding tables and other methods also reflect the temporary expansion of the top personal income tax brackets and rates effected by Part A of Chapter 59 of the Laws of 2021 and provide an additional withholding method to better accommodate the new brackets and rates. Revised City of Yonkers withholding tables and other methods are necessary because the City of Yonkers income tax surcharge is a specified percentage of New York State tax. The rule also updates 20 NYCRR sections 171.4 and 251.1 to reflect the new brackets and rates and the additional withholding method.

3. Needs and benefits: This rule sets forth adjustments to the New York State and City of Yonkers withholding tables and other methods, applicable to wages and other compensation paid on or after January 1, 2022, reflecting the changes in tax rates contained in Part TT of Chapter 60 of the Laws of 2016 and Part A of Chapter 59 of the Laws of 2021. This rule benefits taxpayers by providing New York State and City of Yonkers withholding tables and other methods that more accurately reflect the current income tax rates. If this rule is not promulgated, the use of the existing withholding tables would cause over-withholding or under-withholding for some taxpayers.

4. Costs:

(a) Costs to regulated parties for the implementation and continuing compliance with this rule: Since (i) the Tax Law and the Code of the City of Yonkers already mandate withholding in amounts that are substantially equivalent to the amounts of New York State and City of Yonkers personal income tax on residents reasonably estimated to be due for the taxable year, and (ii) this rule conforms Appendixes 10 and 10-A of Title 20 NYCRR to the rates of the New York State and City of Yonkers income tax, as necessitated by Chapter 60 of the Laws of 2016 and Chapter 59 of the Laws of 2021, any compliance costs to employers associated with implementing the revised withholding tables and other methods are due to statute, and not to this rule.

(b) Costs to this agency, the State and local governments for the implementation and continuation of this rule: Since the need to make amendments to Appendixes 10 and 10-A arises due to the statutory changes in the rates of the New York State personal income tax, which affect the City of Yonkers income tax surcharge because it is a percentage of New York State tax, there are no costs to this agency or the State and local governments that are due to the promulgation of this rule.

(c) Information and methodology: This analysis is based on a review of the statutory requirements and on discussions among personnel from the Department’s Taxpayer Guidance Division, Office of Tax Policy Analysis and Office of Budget and Management Analysis.

5. Local government mandates: Local governments, as employers, would be required to implement the new withholding tables and other methods in the same manner and at the same time as any other employer.

6. Paperwork: This rule will not require any new forms or information. The reporting requirements for employers are not changed by this rule. Employers will be notified of the amendments to the tables and other methods and directed to the Department’s website for the updated tables and other methods.

7. Duplication: This rule does not duplicate any other requirements.

8. Alternatives: Since Tax Law sections 671(a) and 1329(a), section 15-105 of the Code of the City of Yonkers, Part TT of Chapter 60 of the Laws of 2016 and Part A of Chapter 59 of the Laws of 2021 require that withholding tables and other methods be promulgated, there are no viable alternatives to providing such tables and other methods.

9. Federal standards: This rule does not exceed any minimum standards of the federal government for the same or similar subject area.

10. Compliance schedule: The required information will be made available to affected employers in sufficient time to implement the revised New York State and City of Yonkers withholding tables and other methods for wages and other compensation paid on or after January 1, 2022.

1. Effect of rule: Small businesses and local governments, within the meaning of the State Administrative Procedure Act, that are currently subject to the New York State and City of Yonkers withholding requirements will continue to be subject to these requirements. This rule, therefore, should have little or no effect on small businesses and local governments other than the requirement of conforming to the new withholding tables and other methods. All small businesses and local governments that are employers or are otherwise subject to the withholding requirements must comply with the provisions of this rule.

2. Professional Services:

Further, many employers currently utilize bookkeepers, accountants, and professional payroll services to comply with existing withholding requirements. This rule will not encourage or discourage the use of any such services.

3. Compliance requirements: This rule requires small businesses and local governments that are already subject to the New York State and City of Yonkers withholding requirements to continue to deduct and withhold amounts from employees using the revised withholding tables and other methods. The promulgation of this rule will not require small businesses or local governments to submit any new information, forms, or paperwork.

4. Compliance costs: The amendments do not impose any additional program, service, duty, responsibility or cost on small businesses or local governments. Small businesses and local governments currently subject to the New York State and City of Yonkers withholding requirements will continue to be subject to these requirements.

5. Economic and technological feasibility: The rule does not impose any additional costs or technological requirements on small businesses or local governments.

6. Minimizing adverse impact: Tax Law section 671(a)(1) requires that the New York State withholding tables and other methods be promulgated. Section 1332(a) requires that the City of Yonkers withholding of tax on wages shall be administered and collected by the Commissioner of Taxation and Finance in the same manner as the tax imposed by Article 22 of the Tax Law. There are no provisions in the Tax Law that exclude employers that are small businesses or local governments from the withholding requirements.

These amendments implement the incremental tax rate decrease effected by Part TT of Chapter 60 of the Laws of 2016 and the temporary expansion of the top personal income tax brackets and rates effected by Part A of Chapter 59 of the Laws of 2021. The rule also adds a new withholding method to better accommodate the new brackets and rates. The new withholding tables and other methods enable small businesses and local governments to comply with the requirement that employers withhold from employee wages amounts that are substantially equivalent to the amount of New York State and City of Yonkers personal income tax on residents reasonably estimated to be due for the taxable year.

The amendments minimize adverse impact on small businesses and local governments and do not impose any additional costs to the State, regulated parties, or the Department of Taxation and Finance beyond those inherent in the implementation of Tax Law section 671(a)(1), Part TT of Chapter 60 of the Laws of 2016 and Part A of Chapter 59 of the Laws of 2021. Accordingly, no alternatives were considered.

Tax Law sections 671(a) and 1329(a), section 15-105 of the Code of the City of Yonkers, Part TT of Chapter 60 of the Laws of 2016 and Part A of Chapter 59 of the Laws of 2021 require that withholding tables and other methods be promulgated. The rule merely implements these requirements. Providing withholding tables and other methods reflecting the current personal income tax brackets and rates, together with an additional withholding method to better accommodate the expanded top brackets and rates, assists employers in meeting their statutory obligations.

7. Small business and local government participation: The following organizations are being given an opportunity to participate in the rule's development: the Association of Towns of New York State; the Division of Local Government Services of New York State Department of State; the Division of Small Business of Empire State Development; the National Federation of Independent Businesses; the New York State Association of Counties; the New York Conference of Mayors and Municipal Officials; the Small Business Council of the New York State Business Council; the Retail Council of New York State; the New York Association of Convenience Stores; the Tax section of the New York State Bar Association; the Association of the Bar of the City of New York; the National Tax Committee for the National Conference of CPA Practitioners; the New York State Society of CPAs; and the Business Council of New York State.

1. Types and estimated numbers of rural areas: Every employer, including any public or private employer located in a rural area as defined in section 102(10) of the State Administrative Procedure Act, that is currently subject to the New York State and City of Yonkers withholding requirements will continue to be subject to such requirements and will be required to comply with the provisions of this rule. The number of employers that are also public or private interests in rural areas cannot be determined with any degree of certainty. There are 44 counties throughout this State that are rural areas (having a population of less than 200,000) and 9 more counties having towns that are rural areas (with population densities of 150 or fewer people per square mile).

2. Reporting, recordkeeping and other compliance requirements; and professional services: This rule requires employers that are already subject to the New York State and City of Yonkers withholding requirements to continue to deduct and withhold amounts from employees using the revised withholding tables and other methods. The promulgation of this rule will not require employers to submit any new information, forms or other paperwork.

Further, many employers currently utilize bookkeepers, accountants, and professional payroll services to comply with existing withholding requirements. This rule will not encourage or discourage the use of any such services.

3. Costs: Employers are already subject to the New York State and City of Yonkers withholding requirements. Therefore, employers are accustomed to withholding revisions, including minor programming changes for federal, state, and City of Yonkers purposes. As such, these changes in the withholding tables and other methods should place no additional burdens on employers located in rural areas. See, also, section 4(a) of the Regulatory Impact Statement for this rule.

4. Minimizing adverse impact: Tax Law section 671(a)(1) requires that the New York State withholding tables and other methods be promulgated. Section 1332(a) requires that the City of Yonkers withholding of tax on wages shall be administered and collected by the Commissioner of Taxation and Finance in the same manner as the tax imposed by Article 22 of the Tax Law. There are no provisions in the Tax Law that exclude employers located in rural areas from the withholding requirements.

5. Rural area participation: The following organizations are being given an opportunity to participate in the rule's development: the Association of Towns of New York State; the Division of Local Government Services of New York State Department of State; the Division of Small Business of Empire State Development; the National Federation of Independent Businesses; the New York State Association of Counties; the New York Conference of Mayors and Municipal Officials; the Small Business Council of the New York State Business Council; the Retail Council of New York State; the New York Association of Convenience Stores; the Tax section of the New York State Bar Association; the Association of the Bar of the City of New York; the National Tax Committee for the National Conference of CPA Practitioners; the New York State Society of CPAs; and the Business Council of New York State. In addition, the City of Yonkers was consulted.

A Job Impact Statement is not being submitted with this rule because it is evident from the subject matter of the rule that it would have no adverse impact on jobs and employment opportunities. The purpose of the rule is to provide New York State and City of Yonkers withholding tables and other methods, applicable for compensation paid on or after January 1, 2022. The new withholding tables and other methods for New York State and the City of Yonkers reflect the incremental decrease in New York State personal income tax effected by Part TT of Chapter 60 of the Laws of 2016. The new withholding tables also reflect the temporary expansion of the top personal income tax brackets and rates and the addition of a third withholding method to better accommodate the new brackets and rates. The rule also updates 20 NYCRR sections 171.4 and 251.1 to reflect the new brackets and rates and the additional withholding method. The changes require revised City of Yonkers withholding tables and other methods because the City of Yonkers income tax surcharge is a percentage of New York State tax.