This year has brought many legislative changes. Here is a look back at the items that have become effective in the last six months, and a reminder about those items set to become effective in the last half of 2018.

 

 

Effective January 1 – June 30           

 

Federal Tax Updates

 

SSA lowers the 2018 Social Security wage base from what was previously announced:

 

On November 27, 2017, the Social Security Administration (SSA) announced that due to its receipt in late October 2017 of approximately 500,000 Form W-2 corrections for tax year 2016, it has now lowered the 2018 Social Security taxable wage base to $128,400, down from the $128,700 it originally announced on October 13, 2017. The employee and employer contribution rates remain the same from 2017 to 2018 at 6.2%

 

The revised 2018 wage base of $128,400 is lower than the $130,500 projected in the July 2017 Annual Report of The Board of Trustees

 

The Medicare tax rate for 2018 remains at 1.45% of all covered earnings for employers and employees. For wages in excess of $200,000, the Additional Medicare Tax of 0.9% applies to earned income of more than $200,000 ($250,000 for married couples filing joint). While employers are required to withhold the additional 0.9% on covered wages in excess of $200,000, there is no employer matching contribution

 

 

 

 

2018 State Withholding Tax Table Changes

 

 

Colorado has Issued New Withholding Tax Tables

 

◦ Colorado Department of Revenue (CDOR) has issued new withholding tables

 

Tables are effective for April 1, 2018

 

The new tables are in the March 30, 2018 version of Publication DR 1098, Colorado Income Tax Withholding Tables For Employers

 

◦ The CDOR recommends using the tables for the remainder of calendar year 2018 in order to ensure more appropriate withholding

 

◦ The adjustments to the withholding tables for the remainder of 2018 include a catch-up calculation that is meant to ensure changes from the federal tax law updates are less likely to result in under-withholding for Colorado employees

 

◦ Publication DR 1098 will be updated again at the end of calendar year 2018 on the CDOR’s regular schedule of updating the tables only in odd-numbered years

 

◦ Click here for more information

 

 

 

Idaho 2018 Revised Withholding Tax Tables are Effective Immediately

 

Idaho State Tax Commission passed House Bill 463 to conform to the 2018 Internal Revenue Code

 

Idaho has published A Guide to Idaho Income Tax Withholding on April 27, 2018

 

The withholding tables are effective May 1, 2018, and the agency recommends using the new tables immediately going forward

 

The agency also recommends employees review their withholding each year to make sure the withholding reflects their current situation

 

Idaho does not have a state equivalent of the Federal Form W-4

 

Employees should complete the Federal Form W-4 for both Federal and Idaho wage withholding tax purposes

 

Click here for more information

 

 

 

Kentucky 2018 Revised Withholding Tables Released

 

The Kentucky Department of Revenue has released revised 2018 withholding tables and computer formula effective with tax years after January 2018

 

The revision was made in response to the recently enacted legislation replacing the graduated personal and corporate income tax tables with a flat income tax rate of 5%

 

The previous individual income tax brackets ranged from 2% to 6% and corporate income tax rates ranged from 4% to 6%

 

The revised withholding tables are effective with wages paid on and after June 1, 2018 and employers are not required to retroactively adjust the withholding

 

The standard deduction for 2018 is $2,530; this is an increase from the 2017 standard deduction amount of $2,480

 

No longer any withholding tax exemptions allowed and Form K-4 for tax years beginning on and after January 1, 2018

 

The agency plans to remove the Form K-4 from their website soon

 

Click here for more information

 

 

 

Louisiana Emergency Rule Changes Income Tax Withholding Formula 

 

Effective February 16, 2018

 

Employers should begin using the 2018 withholding tables as soon as possible

 

The revised withholding formula is available here

 

The emergency rule is necessary to prevent undue delay in notifying employers of the updated withholding requirements so that employers can avoid unnecessary penalties and employees do not have unexpected income tax liability

 

The emergency rule is effective February 16, 2018, and will remain in effect until its expiration or upon the adoption of the final rule, whichever comes first

 

Click here for more information

 

 

 

Michigan has Revised Wage-bracket Withholding Tables

 

The Michigan Department of Treasury issued an updated 2018 Michigan Income Tax Withholding Guide and revised 2018 wage-bracket withholding tables effective with wages paid on and after March 1, 2018

 

The income tax and supplemental withholding rate remains at 4.25%

 

The exemption amount for 2018 is $4,050

 

Employees continue to use Form MI-W4 for income tax withholding

 

Employers continue to be required to submit Forms MI-W4 to the state for certain employees

 

Click here for more information

 

 

 

Missouri has Adjusted it’s Withholding Calculations

 

The Missouri Department of Revenue (DOR) has adjusted its withholding calculations

 

Including the increase to the federal standard deduction

 

The Missouri Employer’s Guide (Form 4282), withholding tax tables, withholding tax calculator, and Form MO W-4 (Employee’s Withholding Allowance Certificate) have all been updated

 

The DOR is advising employers to encourage their employees to review their Missouri withholding to ensure the appropriate amount is withheld for 2018

 

Click here for more information

 

 

 

New Mexico has revised its withholding tables

 

New Mexico Taxation and Revenue Department (TRD) has revised its withholding tables, retroactive to Jan. 1, 2018

 

The TRD advises employees to use the right number of withholding allowances even though federal law will not allow a personal exemption amount when they file their 2018 income tax return

 

The New Mexico withholding tables have been updated to reflect the federal tax law changes by limiting the withholding allowance deducted from wages to no more than three allowances

 

The supplemental wage withholding rate remains at 4.9%

 

Click here for more information

 

 

 

North Carolina has Updated it’s Withholding Tables Publication

 

During the 2017 legislative session, the state converted North Carolina’s child tax credit to a child deduction

 

The new “Child Deduction Amount” varies based on a taxpayer’s filing status and adjusted gross income

 

The changes did not result in revisions to the formula tables for the percentage method withholding computations, formula tables for annualized method withholding computations, or the wage bracket tables

 

The conversion of the child tax credit to a child deduction required adjustments to the allowance table for Form NC-4EZ, and the allowance worksheets for Forms NC-4, NC-4 NRA, and NC-4P

 

Employers are not required to obtain a new Form NC-4, NC-4EZ, or NC-4P from each employee

 

Click here for more information

 

 

 

North Dakota Posted New Withholding Tables and Instructions 

    

◦ The North Dakota Office of State Tax Commissioner (STC) has posted new withholding tables and instructions on its website

 

◦  Withholding allowance amounts have been adjusted to equal the 2018 federal amounts in IRS Publication 15 (Circular E)

 

The tax rates in the percentage method withholding tables continue to range from 1.10% to 2.90%

 

◦ The range of wages in the tax brackets have changed

 

◦ The supplemental wage withholding rate remains at 1.84%

 

◦ Employers are not required to adjust any withholding for wages already paid in 2018

 

Click here for more information

 

 

 

Oregon State Income Tax Withholding Formulas and Tables Released

 

The Oregon Department of Revenue has released to its website the 2018 withholding tax formulas and wage bracket withholding tables, effective with wages paid on or after February 1, 2018

 

The updated Oregon Withholding Tax Formulas reflects changes to the inflation adjusted amounts

 

Employees may notice a change in the amount of Oregon tax withheld

 

Employees should be directed to Publication 150‑ 206‑ 643, Oregon Income Tax Withholding to assist them in completing Form W-4 for Oregon purposes

 

Employers may continue to use a 9.0% flat rate to figure withholding on 2018 supplemental wages that are paid at a different time than an employee’s regular payday

 

Click here for more information

 

 

 

Utah has Issued New Withholding Tax Tables

 

Effective May 1, 2018

 

Utah has revised the tables in Publication 14, Withholding Tax Guide, to reflect these changes

 

Employers are not required to retroactively adjust withholding

 

Utah recommends taxpayers use the new Utah state income tax estimator at incometax.utah.gov/paying/tax-estimator to see how their Utah income tax liability might change in 2018

 

Click here for more information

 

 

 

 

Effective July 1 – December 31         

 

 

FEDERAL

 

IRS Revising W-4 Form

 

Effective for 2019 W-4 Form

 

Additional information and updates will be posted as this continues to develop

 

Click here for more information

 

 

 

STATE

 

California Federal UI loan

 

As of May 10, 2018, the US Department of Labor shows that the California (EDD) has repaid its federal unemployment insurance (UI) loan balance with first quarter 2018 receipts

 

FUTA rate projected to return to minimum

 

If California continues to experience a strong economy during the rest of the year with no additional federal loans required, employers will be able to claim the full FUTA tax credit of 5.4% against the 6.0% FUTA tax rate, resulting in a net 0.6% FUTA tax rate for the 2018 tax year (same rate as employers not in credit reduction states)

 

Click here for more information

 

 

 

New York Optional Payroll Expense Tax

 

Employers must opt in by Dec. 1, 2018

 

◦ Effective January 1, 2019

 

◦ In 2019 the annual, per-employee tax will be 1.5 percent of wages in excess of $40,000Employees will be provided with a credit against New York State personal income tax based on wages in excess of $40,000

 

◦ Payroll tax payments would be due at the same time personal income tax withholding payments are remitted

 

◦ Click here for more information

 

 

 

Oregon DOR releases new statewide transit payroll tax forms

 

The Oregon Department of Revenue has released the forms to be used by employers to report the new statewide transit payroll tax, which goes into effect July 1, 2018

 

New Forms OR-STT-1, Oregon Quarterly Statewide Transit Tax Withholding Return, and OR-STT-2, Statewide Transit Tax Employee Detail Report, and OR-STT-V, Oregon Statewide Transit Tax Quarterly Payment Voucher will be used to report the new tax

 

Employers must begin withholding for the new statewide transit tax on July 1, 2018

 

Employers and payers must start withholding the new 0.1% tax from the: wages of Oregon residents (regardless of where the work is performed); wages of nonresidents who perform services in Oregon; and periodic payments made under ORS 316.189, not including retirement income paid to nonresidents from an Oregon source

 

Employers will not be required to match the employee withholding tax

 

Click here for more information

 

 

 

States with Mandatory Retirement Plans

 

California, Connecticut, Illinois, Maryland, Massachusetts, New Jersey, Oregon, and Washington have created savings plans that are in different stages of development or implementation

 

State-sponsored retirement plans generally focus on people working for small companies, as well as younger workers, minorities, and low- to moderate-income earners

 

 The state programs:

 

Are typically designed as Roth individual retirement accounts (IRAs)

 

May be mandated for businesses of a certain size if they don’t offer a retirement plan for their employees

 

Use investment firms and low-risk investments chosen by the state

 

Will require participating employers to set aside a percentage of every worker’s salary each month for the retirement fund, usually 3 percent

 

Allow workers to opt out of contributing via payroll deduction

 

Minimize investment and management costs

 

Improve retirement for people with limited savings options

 

 

You can stay up to date on this information by looking at your Web Pay Glossary!

 

The Glossary can be accessed by doing the following:

 

1. Login to your Web Pay

2. Place your mouse over your ‘Home’ tab

3. Select ‘Glossary’ in the drop down menu

 

 

 

Thank you for choosing Paylocity as your Payroll Tax partner. Should you have any questions please contact your Paylocity Account Manager.

 

This information is provided as a courtesy, may change and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney or Advisor.