New York Employer Compensation Expense Program (ECEP)

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New York Employer Compensation Expense Program (ECEP)

Background

The state of New York Employer Compensation Expense Program (ECEP) has established a new optional Employer Compensation Expense Tax (ECET) effective January 1, 2019 that employers can choose to pay if they have employees that earn over $40,000 annually in New York State. Employees earning over $40,000 are eligible to take a tax credit on their income tax return. For more details, see the state of New York Employer Compensation Expense Program website.

How to Set Up ECEP Tax in Patriot Software

You will need to indicate whether you have elected to participate in the ECEP program for the calendar year. As a new customer in the payroll setup wizard, you will be asked, “Have you made an affirmative election to participate in the ECEP?” If you choose “Yes,” you may need to select the calendar year that you have elected to participate. Note that your actual election to participate in the ECEP is made directly on your New York Business Services Online account. Your “yes/no” answer in Patriot will carry forward to future years unless you change your answer. You can change your settings under Settings > Payroll Settings > NY Employer Compensation Expense Program.

If you do participate, Patriot Software will only calculate the ECEP tax, but will not collect or deposit this tax. This is your responsibility. For payrolls dated January 1, 2019 or later, Patriot will calculate the tax for for participating employers who have employees working in New York state. The tax will calculate on employees who meet the following:

  1. Have wages subject to New York State Income Tax and Medicare
  2. The wages are greater than $40,000 with no limit.

The tax is being phased in over three years at the following rates:

  • 2019: 1.5%
  • 2020: 3%
  • 2021 and after: 5%

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