Employer Compensation Expense Program (ECEP)
The Employer Compensation Expense Program (ECEP) established a new optional Employer Compensation Expense Tax (ECET) that employers can elect to pay if they have employees that earn over $40,000 annually in wages and compensation in New York State.
Employee wages covered by the ECET
Rate of tax
The ECET is being phased in over three years as follows:
|For quarters in tax year:||The rate of tax is:|
|2021 and after||5%|
- An employer will make an annual affirmative election to participate in the ECEP no later than December 1 to pay the optional tax in the following calendar year.
- The initial election must be made no later than December 1, 2018.
- The Department will be providing a web-based registration system to accommodate the employer election into the ECEP.
- If you elect, you should communicate to your employees:
- that you made the election for the year,
- that covered employees making over $40,000 may be eligible for a tax credit when filing their income tax return and should review their IT-2104, Employee’s Withholding Allowance Certificate to adjust their withholding, and
- the amount of wages subject to ECET for the year (the Department’s website will provide a sample template that can be used to communicate this amount to covered employees).
When to file and pay
- The ECET will be paid on the same dates that your withholding tax payments are required to be made.
- The quarterly returns are due on the same dates that your withholding tax returns are due:
|January 1 - March 31||April 30|
|April 1 - June 30||July 31|
|July 1 - September 30||October 31|
|October 1 - December 31||January 31|
* When the due date falls on a Saturday, Sunday, or legal holiday, you may report and pay on the next business day.
How to file and pay
- Although the ECET return and payments are due at the same time as your withholding tax, you must file and pay the taxes separately. You must file all quarterly ECET returns and make all payments online.
For more information, see:
- TSB-M-18(1)ECEP, Employer Compensation Expense Program
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