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Tax reform’s timing wasn’t ideal for Payroll

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in Office Management,Payroll Management

The recently enacted tax reform legislation (colloquially known as the Tax Cuts and Jobs Act, P.L. 115-97) moved through Congress faster than a speeding locomotive—and in December, which is the worst possible time for Payroll.

Two big breaks: The IRS has released the 2018 percentage method withholding tables, which should be put into effect by Feb. 15. Employees don’t have to refile their W-4s with you. Here are highlights of the law.

Flat withholding rates. Flat rates apply to withholding on supplemental wages and backup withholding on independent contractors. These flat rates will sunset at the end of 2025, and unless subsequent legislation extends them, beginning in 2026, they will revert to the 2017 rates.

  • For supplemental wages up to $1 million, the flat rate is the third highest personal income tax rate, or 22% (2017 rate: 25%)
  • For supplemental wages in excess of $1 million, the flat rate is the highest per...(register to read more)

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