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More Details on New York’s Payroll Tax Proposals and APA’s Response

BY: APA Staff | 02/14/18

The New York State Department of Taxation and Finance (DTF) has issued Preliminary Report on the Federal Tax Cuts and Jobs Act (revised 1-23-18) detailing several employer payroll tax proposals under consideration in response to Gov. Andrew Cuomo’s state budget proposal to restructure the state tax system. The goal is to offset the negative effects of the Tax Cuts and Jobs Act (TCJA; Pub. L. 115-97) on New York taxpayers. Certain provisions of the TCJA, including a cap on the amount of state and local income and property taxes that individuals can deduct from their federal taxable income, will effectively raise federal taxes in “high-tax” states like New York.

In the report, the DTF explains in greater detail several proposals under consideration, including a progressive employer compensation expense tax system model, with three different options, a flat rate employer compensation expense tax model, with two options, targeting employer compensation tax above a specified wage threshold, a tax surcharge on supplemental wages, and a new employer compensation expense tax that would apply only to employees that elect to opt in.

Because these different proposals would be a huge change for employers and could spread to other high-tax states, the APA has responded by reviving a Government Relations Task Force (GRTF) subcommittee on state and local taxes. The mission of the subcommittee is to review state tax proposals for their impacts on payroll management with the goal of providing recommendations to state legislators, governors, and agencies. APA members interested in participating should contact APA’s Senior Manager of Government Relations, Alice Jacobsohn, Esq., at [email protected]

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