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Tax Changes Implemented Pay Period (PP) 2023-23 IN, NE, and Localities for IN, KY, and OR

MEMORANDUM

DATE: November 8, 2023
TO: Federal Personnel and Payroll System User Group Representatives
FROM: Christine Zertuche-Rocha, Chief, Payroll Operations Division
SUBJECT: Tax Changes Implemented Pay Period (PP) 2023-23 IN, NE, and Localities for IN, KY, and OR


Please share this information with all impacted employees. The following tax changes were implemented in PP 2023-23. As a result, employees may see a change in their tax withholdings. As a reminder, tax changes are not retroactive to employees’ withholding.

State Tax

  • Indiana Income Tax Withholding:
    • The state and county income tax withholding formula has changed effective September 15, 2023.
    • A new exemption has been added equal to $1,500 for each first-time additional dependent.
    • Datamart Query: Tax State = 18
  • Nebraska Income Tax Withholding:
    • The state income tax withholding formula has changed effective January 1, 2023.
    • Eliminate the minimum withholding requirement for employees who claim Exempt on the Form W-4N, Nebraska Withholding Allowance Certificate.
    • Datamart Query: Tax State = 31

Local Tax

  • Indiana Local Income Tax Withholding:
  • County of Dearborn, IN:
    • The local income tax has changed effective October 1, 2023.
      • The income tax rate has changed from 1.20% to 1.40%.
    • Datamart Query: Tax State = 18 City Code = 029
  • County of Vanderburgh, IN:
    • The local income tax has changed effective October 1, 2023.
      • The income tax rate has changed from 1.20% to 1.25%.
    • Datamart Query: Tax State = 18 City Code = 163
  • Kentucky Local Income Tax Withholding:
  • County of Madison, KY:
    • The local income tax has been implemented at 1%.
    • Datamart Query: Tax State = 21 City Code = 0151
  • County of McCreary, KY:
    • The local income tax has been implemented at 1.5%.
    • Datamart Query: Tax State = 21 City Code = 0147
  • Oregon Local Income Tax Withholding:
  • City of Eugene, OR:
    • Eugene local city tax withholding has been implemented at .44%.
    • Datamart Query: Tax State = 41 City Code = 0660

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.