Here is a roundup of payroll issues that occurred in the past week:
This week, House Republicans unveiled the Tax Cuts and Jobs Act (H.R. 1), which would make certain employer-provided benefits taxable and may affect some payroll processing systems, especially for Forms W-4.
The bill, released Nov. 2, would repeal the tax exclusion for dependent-care assistance, employee achievement awards, educational assistance and other benefits. The bill also would repeal the work opportunity tax credit, modify the Federal Insurance Contributions Act employer credit on tipped employee income, reduce the deductibility of entertainment expenses, and limit employer options in deducting executive pay in excess of $1 million a year.
Another provision of the bill eliminates the annual personal exemption amount, which may require payroll systems to be altered to no longer take into account withholding allowance amounts. Additionally, many states that have income tax withholding base withholding allowances on the federal Form W-4 to calculate state income tax withholding, so withholding taxes in those states also may be affected under the proposal.
Earlier in the week, the Labor Department confirmed that it plans to appeal a federal district court's recent ruling against the department's white-collar overtime final rule. The department would then ask that the matter be put on hold while it issues a new rulemaking, which potentially could include re-adjusting the salary threshold below which workers are eligible for overtime, it said in an Oct. 30 news release.
The department abandoned its original appeal after a federal district court issued an Aug. 31 ruling on consolidated cases that challenged the overtime final rule, invalidating the rule and holding that its revision to the minimum salary threshold exceeded the department's authority.
On Friday, the department rescinded final rules and guidance that would have instructed prospective federal contractors on how to comply with now-defunct requirements that they disclose violations of 14 workplace laws including those related to federal wage and hour.
Maryland and New Jersey released tax data that may help employers prepare for 2018.
Maryland’s local income tax rates for 2018 were published Nov. 1. For 2018, the state is to use 14 brackets with these percentages: 1.75, 2.25, 2.40, 2.50, 2.60, 2.65, 2.80, 2.85, 2.90, 3, 3.05, 3.10, 3.15, and 3.20.
Maryland’s unemployment tax data for 2018, also released Nov. 1, is to be largely unchanged from 2017. The state’s unemployment-taxable wage base is to remain $8,500, tax rates for experienced employers are to continue to range from 0.3 to 7.5 percent, and the standard tax rate for new employers again is to be 2.6 percent.
However, the 2018 unemployment tax rate for new construction employers with headquarters in another state is to decrease to 5.4 percent from 6.6 percent.
New Jersey’s Department of Labor and Workforce announced some employee tax rates for 2018. For employees, the unemployment tax rate to be 0.425 percent, the temporary disability insurance tax rate is to be 0.19 percent, and the family-leave insurance tax rate is to be 0.09 percent.
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