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Corrected – Tax Changes Implemented Pay Period (PP) 2024-03: Federal, PR, AR, CA, CO, CT, GA, IL, IN, KY, ME, MA, MI, MN, MS, MO, MT, NE, NM, NC, ND, OK, OR, RI, SC, VT and Localities in IN and KY

MEMORANDUM

DATE: February 28, 2024
TO: Federal Personnel and Payroll System User Group Representatives
FROM: Christine Zertuche-Rocha, Chief, Payroll Operations Division
SUBJECT: Corrected – Tax Changes Implemented Pay Period (PP) 2024-03: Federal, PR, AR, CA, CO, CT, GA, IL, IN, KY, ME, MA, MI, MN, MS, MO, MT, NE, NM, NC, ND, OK, OR, RI, SC, VT and Localities in IN and KY

(Correction under Montana Income Tax Withholding)

Please share this information with all impacted employees. The following tax changes were implemented in PP 2024-03. As a result, employees may see a change in their tax withholdings. As a reminder, tax changes are not retroactive to employees’ withholdings.

Federal Taxes

  • U.S. Federal Social Security (OASDI) Wage Base – The wage base has increased from $160,200 to $168,600. There is no limit on Medicare wages and the Social Security and Medicare tax rates remain unchanged.
  • U.S. Federal 401 (k) Wage Limits - The 401(k) maximum exclusion limit has increased from $22,500 to $23,000. The catch-up contribution for employees who will be age 50 or over in 2023 will remain at $7,500.
  • U.S. Federal Income Tax: 
    • For withholding based on a pre-2020 Form W-4, Employee’s Withholding Certificate, the annual amount to add to a nonresident alien's taxable wages prior to calculating withholding has increased from $9,550 to $10,300.
    • For withholding based on a 2020 Form W-4, the annual amount to add to a nonresident alien's taxable wages prior to calculating withholding has increased from $13,850 to $14,600.
    • The standard and high-income tax tables for all marital statuses have changed.

U.S. Territory

  • Puerto Rico 401 (k) Wage Limits:
    • The pre-tax contribution limit has changed the pre-tax contribution limit for U.S. federal employees has increased from $22,500 to $23,000.
    • The catch-up contribution limit for Puerto Rico plans that cover U.S. federal government employees will remain $7,500.
    • Datamart Query: Tax State = RQ

State Taxes

  • Arkansas Income Tax Withholding:
    • The income tax withholding formula has changed effective January 1, 2024.
    • The flat tax rate on supplemental wages has changed from 4.7% to 4.4%.
    • The standard deduction amount has increased from $2,270 to $2,340.
    • The wage threshold to adjust annual net taxable income has increased from less than $91,301 to less than $100,001.
    • The standard tax table has changed.
    • The tax credit formula for employees who qualify for the low-income tax tables has changed.
    • Datamart Query: Tax State = 05
  • California Income Tax Withholding:
    • The income tax withholding formula has changed effective January 1, 2024.
    • The low-income exemption amount for Married with 0 or 1 exemption and Single has increased from $17,252 to $17,769.
    • The low-income exemption amount for Married with 2 or more exemptions and Head of Household has increased from $34,503 to $35,538.
    • The standard deduction for Married with 0 or 1 exemption and Single has increased from $5,202 to $5,363.
    • The standard deduction for Married with 2 or more exemptions and Head of Household has increased from $10,404 to $10,726.
    • The Single, Married, and Head of Household withholding tables have changed.
    • The annual personal exemption credit has increased from $154 to $158.40.
    • Datamart Query: Tax State = 06
  • Colorado Income Tax Withholding:
    • The income tax withholding formula has changed effective January 1, 2024.
    • The annual standard deduction for employees who do not complete Form DR 0004, Colorado Employee Withholding Certificate, Line 2, and file as Married Filing Jointly or Qualifying Widow(er) has increased from $9,000 to $10,000.
    • The annual standard deduction for employees who do not complete Form DR 0004 Line 2, and file as anything other than Married Filing Jointly or Qualifying Widow(er) has increased from $4,500 to $5,000.
    • Datamart Query: Tax State = 06
  • Connecticut Income Tax Withholding:
    • The income tax withholding formula has changed effective January 1, 2024.
    • The tax tables have changed for filers claiming withholding code A, D, F, B, or C.
    • The 3% tax rate phase-out add-back tables have changed to represent a 2% phase-out add-back for filers claiming withholding code A, D, F, B, or C.
    • The tax recapture tables have changed for filers claiming withholding code A, D, F, B, or C.
    • Datamart Query: Tax State = 09
  • Georgia Income Tax Withholding:
    • The income tax withholding formula has changed effective January 1, 2024.
    • The standard deduction for employees who claim Married Filing Jointly where only one spouse works has increased from $7,100 to $24,000.
    • The standard deduction for employees who claim Single, or Head of Household has increased from $5,400 to $12,000.
    • The standard deduction for employees who claim Married Filing Separate or Married Filing Joint where both spouses work has increased from $3,550 to $12,000.
    • The personal allowance deductions for employees and spouses have been removed and are replaced by the higher standard deduction amounts.
    • The graduated tax tables based on marital status have been replaced by a flat tax rate of 5.49%.
    • The highest tax rate in the special formula table for supplemental wages has changed from 5.75% to 5.49%.
    • Datamart Query: Tax State = 13
  • Illinois Income Tax Withholding:
    • The income tax withholding formula has changed effective January 1, 2024.
    • The annual exemption amount for the basic allowances claimed for taxpayers, spouses, and other dependents is now $2,775.
    • Datamart Query: Tax State = 17
  • Indiana Income Tax Withholding:
    • The income tax withholding formula has changed effective January 1, 2024.
    • The tax rate has changed from 3.15% to 3.05%.
    • Datamart Query: Tax State = 18
  • Kentucky Income Tax Withholding:
    • The income tax withholding formula has changed effective January 1, 2024.
    • The annual standard deduction has increased from $2,980 to $3,160.
    • The tax rate has changed to 4%.
    • Datamart Query: Tax State = 21
  • Maine Income Tax Withholding:
    • The income tax withholding formula has changed effective January 1, 2024.
    • The annual exemption per allowance claimed has increased from $4,700 to $5,000.
    • The Single and Married standard deduction tables have changed.
    • The Single and Married withholding tables have changed.
    • Datamart Query: Tax State = 23
  • Massachusetts Income Tax Withholding:
    • The income tax withholding formula has changed effective January 1, 2024.
    • The tax table has changed.
    • Datamart Query: Tax State = 25
  • Michigan Income Tax Withholding:
    • The income tax withholding formula has changed effective January 1, 2024.
    • The annual amount per exemption has increased from $5,400 to $5,600.
    • The tax rate has changed from 4.05% to 4.25%.
    • The flat tax rate for supplemental wages has changed from 4.05% to 4.25%.
    • Datamart Query: Tax State = 26
  • Minnesota Income Tax Withholding:
    • The income tax withholding formula has changed effective January 1, 2024.
    • The annual amount per exemption has increased from $4,800 to $5,050.
    • The Single and Married withholding tables have changed.
    • Datamart Query: Tax State = 27
  • Mississippi Income Tax Withholding:
    • The income tax withholding formula has changed effective January 1, 2024.
    • The tax table has changed.
    • Datamart Query: Tax State = 28
  • Missouri Income Tax Withholding:
    • The income tax withholding formula has changed effective January 1, 2024.
    • The flat tax rate for supplemental wages has changed from 4.95% to 4.80%.
    • The standard deduction amount for employees claiming Single, Married Filing Separate, and Married and Spouse Works has increased from $13,850 to $14,600.
    • The standard deduction amount for employees claiming Married and Spouse Does Not Work has increased from $27,700 to $29,200.
    • The standard deduction amount for employees claiming Head of Household has increased from $20,800 to $21,900.
    • The income tax table has changed.
    • Datamart Query: Tax State = 29
  • Montana Income Tax Withholding:
    • The income tax withholding formula has changed effective January 1, 2024.
    • The flat tax rate for supplemental wages has changed from 6% to 5%.
    • The annual deduction for withholding allowances has been removed.
    • The withholding table has been replaced by three withholding tables based on marital status.
    • Correction- A reduced designated PP withholding amount has been added to the state's revised Form MW-4, Montana Employee’s Withholding and Exemption Certificate. The tax formula has been updated to allow for a fixed PP withholding amount that may be less than the amount required based on the state's standard formula.
      • The reduced designated PP withholding amount will be available in FPPS and Employee Express effective April 15, 2024 (release 24.02).
        • A separate User Group memo will be issued at that time.
      • The calculated withholding amounts are rounded up to the next whole dollar instead of rounded to the nearest dollar.
      • Datamart Query: Tax State = 30
  • Nebraska Income Tax Withholding:
    • The income tax withholding formula has changed effective January 1, 2024.
    • The annual amount per withholding allowance has increased from $2,140 to $2,250.
    • The Single and Head of Household withholding table has changed.
    • The Married withholding table has changed.
    • Datamart Query: Tax State = 31
  • New Mexico Income Tax Withholding:
    • The income tax withholding formula has changed effective January 1, 2024.
    • The Single, Married, and Head of Household withholding tables have changed.
    • Datamart Query: Tax State = 35
  • North Carolina Income Tax Withholding:
    • The income tax withholding formula has changed effective January 1, 2024.
    • The flat tax rate on supplemental wages has changed from 4.85% to 4.60%.
    • The wage tax rate for all filers has changed from 4.85% to 4.60%.
    • The adjustment based on the minimum additional withholding amount required to be claimed by nonresident aliens has changed.
    • Datamart Query: Tax State = 37
  • North Dakota Income Tax Withholding:
    • The income tax withholding formula has changed effective January 1, 2024.
    • The flat tax rate on supplemental wages has changed from 1.84% to 1.50%.
    • The tax tables for all filing statuses have changed.
    • Datamart Query: Tax State = 38
  • Oklahoma Income Tax Withholding:
    • The income tax withholding formula has changed effective January 1, 2024.
    • The Married tax table has changed.
    • Datamart Query: Tax State = 40
  • Oregon Income Tax Withholding:
    • The income tax withholding formula has changed effective January 1, 2024.
    • The standard deduction amount for Single filers claiming less than 3 allowances has increased from $2,605 to $2,745.
    • The standard deduction amount for Single filers claiming 3 or more allowances has increased from $5,210 to $5,495.
    • The standard deduction amount for Married filers has increased from $5,210 to $5,495.
    • The annual tax credit amount, per exemption, has increased from $236 to $249.
    • The annualized deduction for federal tax withheld has increased from a maximum of $7,800 to $8,250.
    • The tax tables have changed for all filers.
    • Datamart Query: Tax State = 41
  • Rhode Island Income Tax Withholding:
    • The income tax withholding formula has changed effective January 1, 2024.
    • The annualized wage threshold where the annual exemption amount is no longer available, has increased from $260,550 to $274,650.
    • The wage table has changed.
    • Datamart Query: Tax State = 44
  • South Carolina Income Tax Withholding:
    • The income tax withholding formula has changed effective January 1, 2024.
    • The flat tax rate on supplemental wages has changed from 6.5% to 6.4%.
    • The deduction per personal exemption has increased from $4,310 to $4,610.
    • The maximum standard deduction in case of any exemptions has increased from $6,475 to $6,925.
    • The state tax table has changed.
    • Datamart Query: Tax State = 45
  • Vermont Income Tax Withholding:
    • The income tax withholding formula has changed effective January 1, 2024.
    • The annual amount per exemption has increased from $4,850 to $5,100.
    • The Single and Married tax tables have changed.
    • Datamart Query: Tax State = 50

Local Taxes

  • Indiana Local Income Tax Withholding: 
    • County of Allen:
      • The resident income tax rate has changed to 1.59%.
      • Datamart Query: Tax State = 18 County Code = 003
    • County of Blackford:
      • The resident income tax rate has changed to 2.5%.
      • Datamart Query: Tax State = 18 County Code = 009
    • County of Crawford:
      • The resident income tax rate has changed to 1.65%.
      • Datamart Query: Tax State = 18 County Code = 025
    • County of Floyd:
      • The resident income tax rate has changed to 1.39%.
      • Datamart Query: Tax State = 18 County Code = 043
    • County of Franklin:
      • The resident income tax rate has changed to 1.70%.
      • Datamart Query: Tax State = 18 County Code = 047
    • County of Howard:
      • The resident income tax rate has changed to 1.95%.
      • Datamart Query: Tax State = 18 County Code = 067
    • County of Ohio:
      • The resident income tax rate has changed to 2%.
      • Datamart Query: Tax State = 18 County Code = 115
    • County of Pike:
      • The resident income tax rate has changed to 1.2%.
      • Datamart Query: Tax State = 18 County Code = 125
    • County of Putnam:
      • The resident income tax rate has changed to 2.3%.
      • Datamart Query: Tax State = 18 County Code = 133
    • County of Ripley:
      • The resident income tax rate has changed to 2.38%.
      • Datamart Query: Tax State = 18 County Code = 0137
    • County of Steuben:
      • The resident income tax rate has changed to 1.99%.
      • Datamart Query: Tax State = 18 County Code = 155
  • Kentucky Local Income Tax Withholding: 
    • Bowling Green:
      • The employee tax rate has changed to 2%.
      • Datamart Query: Tax State = 21 City Code = 0350
    • Elizabethtown:
      • The employee tax rate has changed to 1.95%.
      • Datamart Query: Tax State = 21 City Code = 1000
    • Boone County:
      • The taxable wage base has increased from $72,906 to $75,223.
      • The employee tax rate remains at 0.8%.
      • The maximum tax is $601.78.
      • Datamart Query: Tax State = 21 County Code = 015
    • Florence County:
      • The maximum withholding wage base has increased from $160,200 to $168,600 to coincide with the 2024 Federal OASDI wage base.
      • The payroll tax rate remains at 2%.
      • The maximum tax is $3,372.
      • Datamart Query: Tax State = 21 City Code = 1150
    • Kenton County:
      • The maximum withholding wage base has increased from $160,200 to $168,600 to coincide with the 2024 Federal OASDI wage base.
      • There are no longer two taxable wage bases and rates.
      • The payroll tax rate has changed to 0.6997% on all up to the OASDI wage maximum of $168,600.
      • The maximum tax is $1,179.69.
      • Datamart Query: Tax State = 21 County Code = 117

You may execute Datamart queries to identify employees in affected state taxing areas. For Combined File Ad-Hoc query/analysis of applicable States:  add STE Tax State 1 = (State Code above) or STE Tax State 2 = (State Code above) to the filter or prompt lines. See above for the applicable Local Tax State and/or Local Tax City Codes to add to the prompt lines (Occurrences – Other PE Pay). 

The Interior Business Center (IBC) Payroll website is updated frequently; you may view the state tax formulas here: Federal, State, and Territorial Income Tax Withholding. Formulas.

If there are any questions, please call the IBC Customer Support Center at 1 (866) 367-1272 or by email at Payroll_Helpdesk@ios.doi.gov.