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Department of Taxation and Finance

Employer Compensation Expense Program (ECEP)

The Employer Compensation Expense Program (ECEP) established an optional Employer Compensation Expense Tax (ECET) that employers can elect each year to pay if they have employees that earn over $40,000 annually in wages and compensation in New York State. Employees of participating employers may be eligible to claim the ECEP wage credit when filing their New York State personal income tax return.

Employee wages covered by the ECET

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.

Rate of tax

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

Tax rates
For quarters in tax year: the rate of tax is:
2019 1 1/2%
2020 3%
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.
  • Enrollment for tax year 2022 will begin on October 1, 2021.
  • 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.

When to file and pay

  • 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:
Quarters and due dates
Quarter Due date*
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

For more information, see: