New York state lawmakers found a clever way for employers to help their workers circumvent a new $10,000 federal cap on state and local tax deductions. Employers, however, so far aren’t crazy about it.

The idea, which became law last month, creates a new optional payroll tax that shifts the state and local tax deduction from individuals who can no longer fully take it to businesses that can. Employers are worried about compliance costs, interactions with union contracts, complexity across state lines and the difficulty of...