NYS Employer Compensation Expense Program

NYS has passed an optional tax on employee wages. The tax will increase to 5% of wages paid in 2021 which could be a very big tax for some employers.
The purpose of the tax is to help employees in NYS deal with the new federal tax law changes which will limit the Federal tax deduction for real estate and income taxes.

The TSN-M-18 was sent to employers but does not address how paying this optional payroll tax will benefit Employers and Employees ?

Optional tax?

Optional tax?

Yes. Also, answer to the OP question is given.

"On Feb. 12, Cuomo announced that New York's 30-Day Amendments to the Executive Budget includes legislation that would allow employers to opt in to a new Employer Compensation Expense Tax (ECET) system. Under this system, which is meant to reduce the effect of the new cap on the SALT deduction on the state's individual taxpayers, the participating employer would be subject to a tax based on a percentage of a covered employee's wages above $40,000. This would be a deductible expense for the employer. The employee would receive a state income tax credit computed as follows: Compensation greater than $40,000 × tax rate × [1 — (tax due before credit ÷ taxable income)]. For 2019, the tax rate would be 1.5% and would increase to 3% in 2020 then to 5% for 2021 and thereafter. If the credit exceeds the employee's tax liability for the year, the excess may be carried forward indefinitely. It may not be refunded.

Opting into the system requires the unanimous consent of all owners of a noncorporate employer or all trustees of a trust. For for-profit and not-for-profit corporations, any authorized officer or manager can make the election. The CEO of a governmental entity can also make the election. The election must be made by Oct. 1 to be effective in the subsequent calendar year. An election would need to be made by Oct. 1, 2018, to be effective for calendar year 2019."

https://www.thetaxadviser.com/issues/20 ... onses.html