2014 City of Yonkers Resident Tax Rates Increased, Withholding Certificate and Tables Revised

Author: Rena Pirsos, XpertHR Legal Editor

August 4, 2014

As a result of the passage of the City of Yonkers, New York, fiscal year 2015 budget act in June, the Yonkers Resident Tax Surcharge has increased. Effective with tax year 2014, the rate is 16.75 percent (up from 15 percent) of the net New York State tax (i.e., the sum of all state taxes imposed for a tax year, less any credits).

Accordingly, effective for wages paid on or after August 1, employers must use revised income tax withholding tables to compute the amount of Yonkers Resident Tax Surcharge to withhold from the wages of employees who are subject to the tax. Employers that use the updated tables will avoid having to adjust Yonkers withholding for tax year 2014.

Because the rate increase is effective January 1, 2014, the revised tables use a catch-up rate of 19.2 percent to ensure that the amount withheld for the remainder of 2014 includes amounts underwithheld for the period January 1 through July 31. The Yonkers withholding tables will be revised again, effective January 1, 2015, to reflect indexing, and the Yonkers rate will be reduced to the annual 16.75 percent rate at that time.

Consequently, Form IT-2104, Employee's Withholding Allowance Certificate, has also been revised. Employers should advise employees who submitted a Form IT-2104 before August 1, 2014, requesting an additional dollar amount of Yonkers withholding, to complete a revised Form IT-2104 to prevent underwithholding.

Also effective August 1, the supplemental wage tax rate for Yonkers is 1.84704 percent, up from 1.443 percent. An employer must use the supplemental wage rate to calculate tax on payments such as bonuses, awards, commissions and overtime pay.

All wages paid to a City of Yonkers resident are subject to withholding for the Yonkers Resident Tax Surcharge, even if the services may have been performed outside of Yonkers. Individuals who reside in Yonkers and certain areas of Bronxville, Scarsdale, and Tuckahoe are subject to Yonkers resident income tax withholding. Employers may use the New York State Department of Taxation and Finance Withholding Tax Jurisdiction Lookup Service to determine if an employee's address is in the City of Yonkers for the purposes of withholding Yonkers resident income tax.

For nonresidents of Yonkers, the Nonresident Earnings Tax rate remains 0.5 percent of wages, and the supplemental withholding rate remains 0.50 percent for tax year 2014.