2023 Payroll Tax & How NY Employees Can Mitigate the Cost

Client Alerts

Berdon State and Local Tax Team

12.13.22 | Client Alert

The New York State Senate is considering a bill (S9082) to establish A New York Long-Term Care Fund (the “Fund”). The proposed bill is titled the New York Long Term Care Trust Act (the “Act”). If enacted, the Act would impose a payroll tax (“premiums”) on all employees working in the state of New York to pay into the Fund.

EMPLOYER RESPONSIBILITIES

Employers will collect the premiums through payroll deductions and remit them to the New York State Department of Taxation & Finance. The payroll tax rate is projected to be between .58% and .99% for the initial year without any cap. The current version of the Bill provides employees with a daily caregiver benefit (in-home care and care at certain facilities) of up to $100 per day and a lifetime benefit cap of $36,500 (adjusted for inflation).

THE OPT-OUT OPTION

If the Bill is enacted, high-income employees working in New York (including residents of neighboring states who work in New York) may be better off financially by opting out of the Fund. To opt-out, an employee must purchase private long-term care insurance that meets certain minimum benefit requirements, and the policy must be in force beginning no later than January 1st of “the year in which the New York Long-Term Care Fund takes effect.” If the law is passed at any point in 2023, only those enrolled in a policy by January 1, 2023, would be eligible for the exemption. We recommend contacting your insurance agent or provider to consider your long-term care insurance options.

If you have questions, contact Wayne K. Berkowitz at 212.331.7465 | wberkowitz@berdon.com or reach out to your Berdon advisor.