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Tax Change Implemented Pay Period (PP) 2023-10: MD, MI, and WV

MEMORANDUM

DATE: May 10, 2023
TO: Federal Personnel and Payroll System User Group Representatives
FROM:
Christine Zertuche-Rocha, Chief, Payroll Operations Division
SUBJECT: 
Tax Change Implemented Pay Period (PP) 2023-10: MD, MI, and WV


Please share this information with all impacted employees. The following tax changes were implemented in PP 2023-10. 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 Changes

Maryland Income Tax Withholding:

  • The state and local income tax withholding formula for Maryland has changed effective January 1, 2023.
  • The local tax rates are now equal to the exact tax rate or exact graduated tax rates for each county. The formulas no longer support the alternative percentage method rates.
  • The tax calculation for Anne Arundel County has been updated to support a graduated tax rate based on annualized income.

If annualized taxable wages are, 

then the annual tax is equal to 

$0 to $50,000 

Annualized Wages x 2.70% 

Over $50,000 

$1,350 + ((Annualized Wages - $50,000) x 2.81%) 

  • The tax calculation for Frederick County has been updated to support multiple fixed tax rates which are dependent on the employee's marital status and annualized income.

If the marital status is 

and the annualized taxable wages are 

then multiply the annualized wages by 

Single 

$50,000 or less 

2.75% 

Over $50,000 

2.96% 

Married 

$100,000 or less 

2.75% 

Over $100,000 

2.96% 

  • The flat tax rate for supplemental wages is equal to the highest state tax rate and the highest local tax rate that applies to the employee.
  • The flat tax rate for supplemental wages for Anne Arundel County is 2.81%.
  • The flat tax rate for supplemental wages for Frederick County is 2.96%.
  • Datamart Query: Tax State = 24

Michigan Income Tax Withholding:

  • The state income tax withholding formula for Michigan has changed effective January 1, 2023, based on legislation passed on April 3, 2023.
  • The flat tax rate on supplemental wages has changed from 4.25% to 4.05%.
  • The standard tax rate has changed from 4.25% to 4.05%.
  • Datamart Query: Tax State = 26

West Virginia Income Tax Withholding:

  • The state income tax withholding formula for West Virginia has changed immediately based upon legislation passed on March 7, 2023. The two earner/two jobs and optional one earner/one job tables have changed.
  • Datamart Query: Tax State = 54

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.

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.