Employer Compensation Expense Program (ECEP)

If you elect into the ECEP for the year, you will pay the ECET on the New York payroll expense that exceeds $40,000 for the calendar year paid to each employee employed in New York State.

The ECET rate has been phased in over three years as follows:

• 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.
• Enrollment for tax year 2025 will begin on October 1, 2024.
• An employer will make their election using their Business Online Services account. See Employer Compensation Expense Program (ECEP) Employer Election.
• Employers who elect to participate in the program should:
  
  • Tell employees that they opted into the ECEP.
  • Notify employees making over $40,000, annually, in New York State that they may be eligible for a tax credit when filing their income tax return.
  • Encourage those covered employees to review their Form IT-2104 and adjust their withholding, if necessary.
  • Communicate to covered employees where to find the amount of wages and compensation needed to compute the tax credit. You may use this sample template to communicate such information to covered employees.

Note: Once the election is made, the ability to revoke the election is limited. For more information, visit Revoking the Employer Compensation Expense Program (ECEP) employer election.

• Once a covered employee’s wages paid exceed $40,000, you must begin remitting the ECET due.
• 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:

* When the due date falls on a Saturday, Sunday, or legal holiday, you may report and pay on the next business day.

• 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 on how to file, see Employer Compensation Expense Tax (ECET) Web File.
• For more information on how to pay, see Employer Compensation Expense Tax (ECET) Web Payment.