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Tax Changes Implemented Pay Period (PP) 2023-03: IL and Localities in KY and OH

MEMORANDUM

DATE: February 1, 2023
TO: Federal Personnel and Payroll System User Group Representatives
FROM: Christine Zertuche-Rocha, Chief, Payroll Operations Division and Robert Crest, Chief, Personnel Payroll Systems Division
SUBJECT: Action Required: Tax Changes Implemented Pay Period (PP) 2023-03: IL and Localities in KY and OH

Please share this information with all impacted employees. The following tax changes are implemented in PP 2023-03. As a result, employees may see a change in their tax withholdings. As a reminder, tax changes are not retroactive to employees’ withholdings.

State Tax Changes

Illinois Income Tax Withholding:

  • The annual exemption amount for the basic allowances claimed for taxpayers, spouses, and other dependents has increased from $2,425 to $2,625.
  • Datamart Query: Tax State = 17

Local Tax Changes

Kentucky Local Income Tax Withholding:

Florence:

  • The maximum withholding wage base has increased from $147,000 to $160,200 to coincide with the 2023 Federal OASDI wage base.
  • The payroll tax rate remains at 2.00%.
  • The maximum tax is $3,204.
  • Datamart Query: Tax State = 21 City Code = 1150

Kenton County:

  • The maximum withholding wage base has increased from $147,000 to $160,200 to coincide with the 2023 Federal OASDI wage base.
  • The lower taxable wage base limit has increased from $25,000 to $80,100.
  • The payroll tax rate has increased from 0.7097% to 0.9097% on wages up to $80,100. 
  • The payroll tax rate is 0.1097% on wages greater than $80,100 and up to the OASDI wage maximum of $160,200.
  • The maximum tax is $816.54.
  • Datamart Query: Tax State = 21 County Code = 117

Ohio Local Income Tax Withholding:

Athens:

  • The local income tax withholdings rate has increased from 1.85% to 1.95%
  • Datamart Query: Tax State = 39 City Code = 0360

Lancaster:

  • The local income tax withholdings rate has increased from 2.20% to 2.30%
  • Datamart Query: Tax State = 39 City Code = 4050

You may execute Datamart queries to identify employees in affected 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: https://ibc.doi.gov/HRD/FedStateTerritorial.

If there are any questions, please call the IBC Customer Support Center at 720-673-9958 (interim contact number) or by email at Payroll_Helpdesk@ios.doi.gov.