Due to the new federal tax legislation signed into law on May 28, 2003, the
Internal Revenue Service (IRS) has issued new federal percentage tables for
computing the federal withholding tax deductions. In addition, the new
legislation instructs employers to reduce the supplemental flat withholding
rate from 27% to 25%. Finally, the value for one withholding exemption
increases from $3050.00 to $3100.00 per year. Employers are encouraged to use
the new tables as soon as the tables can be worked into their payroll systems,
but not later than July 1, 2003. The Division of Accounts and Reports Payroll
Systems Team will implement the changes listed above effective with the pay
period beginning June 8, 2003 and ending June 21, 2003, paid July 3, 2003.
The attached tables have been prepared for use in computing all federal withholding tax payments for wages paid on or after July 1, 2003. When calculating federal withholding tax by annualizing, 26 pay periods should be used to arrive at an annualized amount. The Department of Administration will make all of the necessary changes in the computation of withholding taxes for SHARP agencies. Regents' institutions are responsible for implementing the new withholding tax tables and supplemental wage withholding rate in their respective payroll systems for paychecks issued on or after July 1, 2003. DB:JJM:rb Attachment: Schedule A
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