In a recent blog post, we discussed the recent New York Marriage Equality Act that become effective July 24, 2011. At the time of our earlier post, the state tax treatment was still unclear due to past guidance. Last week, the New York Department of Taxation and Finance published guidance on their website addressing the state income tax treatment for same-gender marriages. The guidance provides that, beginning with the 2011 tax year, same-gender married couples must file state income taxes as married, even though not recognized as married for federal tax purposes. Instructions from the agency clarify that employers do not need to withhold state and local income tax on the value of benefits, such as health coverage, provided to same-gender married couples.

For employers that offer health coverage to same-gender married couples in New York, employers or their payroll processors should consider reprogramming the withholding of New York state and local income tax.