Article: 50499
Overview
The Employer Compensation Expense Program (ECEP) was created by New York State as an optional program to help mitigate the effects of the federal cap on state and local tax (SALT) deductions. Employers participating in the program pay a special payroll tax, and eligible employees can claim credit on their New York personal income tax return.
To claim this credit, you must complete Form IT-226 – Employer Compensation Expense Program Wage Credit and include it with your NYS Form IT-201 (full-year resident) or IT-203 (nonresident/part-year resident).
Who is Eligible?
You may claim the ECEP Wage Credit if:
- Your employer elected to participate in New York’s Employer Compensation Expense Program, and
- You were a covered employee whose wages were subject to the ECEP tax, and
- Your W-2 or pay stubs show compensation subject to the ECEP.
- Only wages subject to ECEP are eligible, standard wages not covered under the program do not qualify.
- Note: This credit is nonrefundable, meaning it can reduce your New York tax liability to zero but will not result in a refund. The credit amount is equal to the employer ECEP tax paid on your behalf.
How to Report
- Navigate to the State Taxes section on the left-hand side of the screen.
- Click the link: I’d like to see the forms I’ve filled out or search for a form.
- In the dropdown menu, select New York.
- Click on the IT Credits 100 – 200 Series tab.
- Select IT-226 – Employer Compensation Expense Program Wage Credit to open the screen.
- Enter all applicable information.
- Click Save once complete.
Additional Resources
For further guidance, see: