New York State Taxes
Employees that live outside of New York may be eligible to withhold taxes for their state of residence instead of New York State.
New York State Department of Tax and Finance issued Form IT-2104.1 – New York State, City of New York, and City of Yonkers Certificate of Nonresidence and Allocation of Withholding Tax (Form) to determine the taxability of a resident or nonresident. This Form should be completed by each nonresident employee and filed with the employee’s payroll administrator for review and retention. The payroll office may adjust the employee’s state withholding to conform with the submitted Form so long as the employee certifies on that Form that they are a nonresident, not performing services within New York State, and the agency confirms that the primary work location is outside of New York State and that the agency reasonably expects that the employee will not perform services in New York State during the calendar year.
New York City County Reporting
Employees that live inside any of the five boroughs of New York City (Bronx, Brooklyn, Kings, Queens, New York) should have their county listed in their address in ‘Modify a Person’ for accurate tax reporting on the W-2 at the end of the year. To have taxes withheld employees will need to submit an IT-2104 to the agency with local tax portions filled out.
If an employee lives outside of New York City but has a New York City County or Zip Code incorrectly input in their address in ‘Modify a Person’, the W-2 will have local wages (Box 18) reported.
Taxable Benefits (Page 3)
Reported TXE
Taxable Employee Expense Reimbursements are considered taxable fringe benefits. As such, they are supplemental taxable income, will be added to the employee’s taxable gross wages for tax withholding purposes, and are subject to employment and income taxes.
The state payroll system calculates all supplemental wages using the supplemental aggregate tax method. Which means it is calculated as if it was paid bi-weekly. Taxes are calculated, using IRS Publication 15T pages 9-11 and IRS guidance for supplemental wages Publication 15, Section 7.
Regardless of the method used to withhold income tax on supplemental wages, wages are subject to Social Security and Medicare taxes.
Imputed Income (IIR/IIS)
Imputed Income (IIR&IIS) is the taxable value of employer provided health benefits to an employee for a domestic partner. The Imputed Income amount does not add to the gross pay for the employee but increases the taxable gross. These amounts come to us from the NYS Department of Civil Services.
Please contact Health Insurance and Employee Benefits if the employee has any questions.
Education Assistance (EDA)
Per IRS Publication 15-B, Employer’s Tax Guide to Fringe Benefits, the first $5,250 of Educational Assistance provided to an employee under an Educational Assistance program is excluded from taxable wages.
Educational Assistance in excess of $5,250 is considered a taxable fringe benefit. As such, it is supplemental taxable income, will be added to the employee’s taxable gross wages for tax withholding purposes, and is subject to employment and income taxes.
A qualified program may benefit only the employee. A program that provides benefits to a spouse or dependents of employees is not a qualified program.
Benefits paid by a nonqualified program are fully taxable.
Most State of New York programs are qualified programs. Please see IRS Publication 15-B for further information.
Personal Use of an Employer Vehicle (PEV)
The taxable value of personal use of an employer-provided vehicle is supplemental taxable income and is subject to income and Social Security/Medicare taxes. It must be reported as income on the Form W-2 Statement. New York State will not withhold Federal income taxes. However, State, Local and Social Security/Medicare taxes will be withheld at the Aggregate method.
The amount of the taxable value is not considered salary for the purposes of computing retirement benefits.
Last Updated October 2026