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January 2 - 6, 2023 Compliance Updates: 2023 Withholding Tables

Jan 6, 2023 1:42:23 PM

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State Roundup: 2023 Withholding Tables

Many states have issued new withholding tables for 2023.

Note: The following states do not have an income tax: Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming. 

States that have issued new 2023 withholding tables include:

  • California 
  • Illinois 
  • Indiana 
  • Iowa 
  • Kentucky 
  • Maine 
  • Maryland 
  • Minnesota 
  • Mississippi 
  • Missouri 
  • Nebraska ; 
  • New Mexico 
  • New York (New York State remain unchanged for 2023)
  • North Carolina 
  • North Dakota 
  • Oklahoma 
  • Oregon 
  • Rhode Island 
  • South Carolina 
  • Vermont 

Other Notes

Alabama. As of the time of publication, the state has not yet released 2023 tables. As in years past, the Alabama Department of Revenue reviews the 2023 IRS Publication 15-T to determine if updates are required for the state withholding tables. Publication 15-T was released so we can expect the state withholding tables soon. 

Arizona. According to the Arizona Department of Revenue (ADOR), taxpayers must complete new withholding tax forms for 2023 due to the state's tax rate change next year. These forms include A-4 (Employee’s Arizona Withholding Election), A4-P (Annuitant’s Request for Voluntary Arizona Income Tax Withholding), and A-4V (Voluntary Withholding Request for Arizona Resident Employed Outside of Arizona). Arizona Senate Bill 1828 included a provision that would gradually reduce the state income tax rate to a flat 2.5% if certain state revenue goals were met. The updated Form A-4 notes that if an employee fails to complete the form, employers must withhold at the default rate of 2.0% of the employee's wages until a completed Form A-4 has been received. The 2023 withholding request forms allow taxpayers to elect withholding from 0.5% to 3.5% (previously 0.8% to 5.1%). 

Arkansas. The Arkansas Department of Finance and Administration (DFA) released withholding tables, effective October 1, 2022. These tables include the following: (1) the Withholding Tax Regular Income Tax Tables for employers to use in calculating the amount of tax to withhold from employee wages that reflect the weekly, biweekly, semimonthly, and monthly payroll periods based on wages and the number of exemptions; (2) the Withholding Tax Formula Method for employers with electronic systems to compute the amount of withholding rather than use the withholding tables; and (3) the Withholding Tax Low Income Tax Tables that reflect withholding information for weekly, biweekly, semimonthly, and monthly payroll periods based on wages; filing status as single, head of household/qualifying widow(er), or married; and the number of dependents. 

Colorado.The Colorado Department of Revenue (CDOR) has issued a November 14, 2022 version of DR 1098 (Colorado Income Tax Withholding Worksheet for Employers). The state does not issue withholding tables. DR 1098 prescribes the method for calculating Colorado income tax withholding and supplements the guidance provided in the Colorado Wage Withholding Tax Guide, which contains information about wage withholding requirements, taxable and exempt wages, filing frequency, and W-2 wage and tax statements. Colorado withholding is based on the IRS Form W-4 or Colorado Form DR 0004 (Colorado Employee Withholding Certificate). Note that on November 8, voters approved a ballot measure that reduces the state income tax rate from 4.55% to 4.40%. The worksheet reflects the new reduced income tax rate of 4.40%.

Connecticut. No new withholding tables will be issued for the 2023 tax year. 

Delaware. A spokesperson for the Delaware Division of Revenue has told Thomson Reuters that the Division does not expect to issue new withholding tables for the 2023 tax year.

District of Columbia. Our requests regarding the 2023 tax year have gone unanswered. However, the Office of Tax and Revenue (OTR) has informed Thomson Reuters that employers to use new income tax rates for 2022 despite the lack of issued guidance

Georgia. The state released a revised Employer's Guide for 2023, however, the withholding tables remain the same for 2023. 

Hawaii. Tables last revised in 2013 remain in effect. 

Idaho. Last revised June 2022. The state revises withholding tables in May or June of each year after the legislative session ends (usually in April) to include any new tax laws that may impact income tax withholding.

Kansas. Last revised, effective January 1, 2021. The state has not yet responded to our inquiries regarding new withholding tables. 

Louisiana. No new withholding tables will be issued for 2023. Tables effective January 1, 2022, remain good for 2023.

Massachusetts. Last revised in 2020. The state has not responded to our requests.

Michigan. Tables have not yet been released. For 2023, the withholding rate is 4.25% and the personal exemption amount is $5,400.

Montana. Tables were last revised October 1, 2022 

New Jersey. Last issued July 2018. The state has not responded to our requests.

Ohio. Last revised, effective September 1, 2021. Tables remain good for 2023.

Pennsylvania. The state doesn't have any withholding tables (employers must withhold 3.07%).

Utah. Last revised May 1, 2022. Good for 2023.

Virginia. Last revised October 1, 2022.

Wisconsin. Last revised tables October 2022 for 2022 and 2023 tax years

West Virginia. Last revised in 2007. Good for 2023.

Labor Department's 2022 Enforcement Report Contains Efforts to Reduce Worker Misclassification

The U.S. Department of Labor's (DOL) Solicitor of Labor (SOL) Enforcement Report for Fiscal Year (FY) 2022 highlights a few of its critical accomplishments in a number of priority areas that includes worker misclassification.

SOL work. According to Seema Nanda, Solicitor of Labor, the SOL enforces over 180 federal statutes and their implementing regulations. Its enforcement work is geared toward promoting positive developments in the law, protecting workers and law-abiding employers, deterring employers from violating the law, and promoting voluntary compliance.

SOL priorities. The SOL's priorities are as follows: (1) combating retaliation against workers, (2) taking impactful approaches and tackling difficult areas of law, (3) promoting equity and protecting those with less access to other forms of relief, (4) increasing pre-referral investigative assistance, and (5) reducing worker misclassification.

Worker misclassification is a top priority. According to the FY 2022 report, employers across all industries often try to get around the law by misclassifying workers as independent contractors, rather than employees. Misclassification also gives a competitive advantage to employers who violate the law, creating an uneven playing field that disadvantages law abiding employers. Nanda says, "That is why I have made reducing worker misclassification one of my top priorities..."

The FY 2022 SOL report explains that it took numerous employers across the country to court when they failed to properly classify their employees and won major cases correcting illegal employer practices and restoring wages and rights to employees. The report notes that the SOL's cases made particular headway in the healthcare industry, with several large court victories and settlements that restored millions in wages to front-line home care workers, nurses, and other professionals for their overtime work throughout the COVID-19 pandemic.

Nanda explains that, "These and other cases are aimed at shifting the incentives for employers who might consider misclassifying their employees and providing effective relief for workers, many of whom are today subject to mandatory arbitration agreements that limit their right to bring cases to federal court and can make systemic relief difficult to achieve."

Highlighted FY 2022 case. One of three highlighted worker misclassification cases in the FY 2022 report said that the SOL obtained a $9.3 million consent judgment that restored overtime wages to 1,756 Pennsylvania medical professionals. According to the FY 2022 report, U.S. Medical Staffing and its owner, Eric Matzkin, willfully misclassified thousands of employees, depriving them of overtime pay for front-line medical work over 40 hours in a week, as required by the Fair Labor Standards Act (FLSA).

In some cases, the employer falsely claimed to be a registry through which the company’s clients solely employed workers. In other cases, U.S. Medical Staffing misclassified employees as independent contractors. SOL negotiated a consent judgment filed in the District Court for the Eastern District of Pennsylvania.

Anticipated DOL worker classification rule. On October 13, 2022, the DOL published a Notice of Proposed Rulemaking to help employers and workers determine whether a worker is an employee or an independent contractor under the FLSA. Worker classification will continue to be a trending payroll topic in 2023 at the federal level, but also with state rules. The DOL extended the comment period on this new proposed rule until December 13, 2022. After the comment period closed, there were 55,000 comments on it

$1.6M Recovered for Restaurant Workers Who Were Denied Overtime Pay

As a result of an investigation by the U.S. Department of Labor's (DOL) Wage and Hour Division (WHD), $1,651,550 in back wages and liquidated damages were recovered from Prapai Boonyindee, the owner of seven Los Angeles restaurants who denied 83 workers overtime wages and kept false pay records in an attempt to hide the wage theft.

Investigation details. The WHD investigation revealed that Boonyindee intentionally did not pay the workers required overtime, and created false records showing they worked no overtime hours in violation of the Fair Labor Standards Act (FLSA). The investigation uncovered violations at six Ocha Classic Restaurant locations in Los Angeles, and one Vim Restaurant location in Panorama City.

Overtime. Unless exempt, employees covered by the FLSA must receive overtime pay for hours worked over 40 in a workweek at a rate not less than time and one-half their regular rates of pay. There is no limit in the FLSA on the number of hours employees aged 16 and older may work in any workweek.

Recordkeeping. Every covered employer must keep certain records for each non-exempt worker. The FLSA requires no particular form for the records, but does require that the records include certain identifying information about the employee and data about the hours worked and the wages earned. The law requires this information to be accurate.

Additional penalties for willful violations. In addition to recovering $825,775 in overtime back wages and an equal amount in damages, the WHD assessed Boonyindee $62,167 in civil money penalties for the willful nature of the violations.

Civil money penalties. Each year, the DOL updates the civil money penalty amounts for inflation. This includes willful violations of the FLSA, which typically involve higher penalty amounts due to the willful nature of the violation. 

Comment from the WHD. WHD Principal Deputy Administrator Jessica Looman commented that: "Wage theft is used by unscrupulous restaurant industry employers to increase their bottom lines at the expense of some of our nation's lowest paid workers. We work tirelessly to recover hard-earned wages owed to workers like these, and employers who disregard workers' rights accountable for their illegal pay practices and their attempt to mislead our investigators."

WHD investigation results. In fiscal year 2021, the Wage and Hour Division recovered more than $34.7 million for more than 29,000 workers in the food service industry. In 2022, the Bureau of Labor Statistics reports near record numbers of job openings and workers in the accommodations and food services industry quitting their jobs.

State Roundup: 2023 Employee Withholding Certificates

As we begin 2023, employers may wish to advise their employees to complete a new state withholding certificate to indicate any changes in marital status, allowances, or other withholding considerations. The majority of states have a state-specific withholding certificate with only three states that use the federal Form W-4 (Employee's Withholding Certificate) for state withholding purposes. The 2023 federal Form W-4 has recently been released. 

Below is the list of the current state withholding certificates available and its last revision date.

Alabama. Form A4 last revised March 2014.

Alaska. The state does not have an income tax.

Arizona. 2023 version of Form A-4 and instructions have been released.

Arkansas. Form AR4EC was revised November 18, 2022 for 2023.

California. Form DE-4 was revised December 2023.

Colorado. Form DR 0004 has been updated for 2023.

Connecticut. Form CT-W4 was updated December 2022.

Delaware. Form DE-W4 was last revised in March 2022.

District of Columbia. Form D-4 is currently under review according to the Department website.

Florida. The state does not have an income tax.

Georgia. Form G-4 last revised May 13, 2021.

Hawaii. Form HW-4 last revised 2022.

Idaho. Form ID W-4 last revised August 1, 2022

Illinois. Form IL-W-4 last revised May 2020.

Indiana.Form WH-4  last revised September 2022. 

Iowa. Form IA W-4 last revised December 1, 2022.

Kansas. Form K-4 last revised November 2018.  

Kentucky. Form K-4 is updated for 2023.

Louisiana. Form L-4 last revised April 2011.

Maine. Form W-4ME last revised for December 2022.

Maryland. Form MW507 last revised May 2022.

Massachusetts. Form M-4 last revised November 2019.

Michigan. Form MI-W4 last revised December 2020.

Minnesota. Form W-4MN released for 2022.

Mississippi. Form 89-350 last revised August 2021.

Missouri. Form MO W-4 last revised August 2021.

Montana. Form MW-4  last revised January 2022.

Nebraska. Form W-4N last revised January 2022.

Nevada. The state does not have an income tax.

New Hampshire. The state does not have an income tax.

New Jersey. Form NJ-W4 last revised January 2021.

New Mexico. This state uses the federal W-4 for state withholding purposes.

New York. Form IT-2104 has been updated for 2023.

North Carolina. Form NC-4 has been revised for 2023. 

North Dakota. This state uses the federal W-4 for state withholding purposes.

Ohio. Form IT-4 last revised December 2020.

Oklahoma. Form OK-W-4 last revised March 2021.

Oregon. Form OR-W-4 has been revised for 2023.

Pennsylvania. The state does not have a withholding certificate because employers withhold a flat rate on all gross compensation.

Rhode Island. A 2022 Form RI W-4 is currently available.

South Carolina. Form SC W-4 has been updated for 2023.

South Dakota. The state does not have an income tax.

Tennessee. The state does not have an income tax.

Texas. The state does not have an income tax.

Utah. This state uses the federal W-4 for state withholding purposes.

Vermont. Form W-4VT last revised December 2018.

Virginia. Form VA-4 last revised August 2011.

Washington. The state does not have an income tax.

West Virginia. Form IT-104 last revised December 2020.

Wisconsin. Form WT-4 last revised July 2022.

Wyoming. The state does not have an income tax. 

IRS Issues 2023 Levy Exemption Table

IRS Publication 1494 (Table for Figuring Amount Exempt from Levy on Wages, Salary or Other Income) has been issued for the 2023 tax year.

The publication includes a table that shows the amount of wages, salaries, and other income that is exempt from a federal tax levy. The amount exempt from levy varies based on the individual's filing status and how frequently the individual is paid. The calculation is now based on the number of dependents that an individual may claim.

A provision in the Tax Cuts and Jobs Act (TCJA) no longer allows individuals to claim personal exemptions on their income tax return. However, Code Sec. 6334(d) was amended to provide that for any year for which the personal exemption amount is zero, pre-Act Code Sec. 6334(d), would be applied by treating $4,150 (indexed annually) as the personal exemption amount. This amount is $4,700 for 2023 as announced in Rev Proc 2022-38.

The amount exempt from levy is determined by adding the standard deduction to the personal exemption amount for each dependent claimed, and dividing that amount by the number of pay periods in the year (i.e., 52 for employees paid weekly, 26 biweekly, 24 bimonthly, 12 monthly, and 260 daily). The standard deduction amounts that are used for this calculation for the 2023 tax year are as follows: (1) $13,850 for single or married filing separately ($12,950 in 2022); (2) $27,700 for married filing jointly and surviving spouses ($25,900 in 2022); and (3) $20,800 for head of household filing status ($19,400 in 2022).

Observation: If you want to understand how the table works, manually compute the amount exempt from levy for an employee with a single filing status who is paid weekly following the guidance above. You would add the $13,850 standard deduction for a single filer to the $4,700 personal exemption amount (total $18,550). Then divide that amount by 52 pay periods to get the amount exempt from levy ($356.73). This is the amount in the levy table for a single filer with one dependent who is paid weekly.

IRS Publication 1494 is also used to recompute the exempt amount on levies issued in earlier years for which the taxpayer has given his employer a new statement of dependents and filing status in 2023.

Interest Payments to Payees with Missing or Incorrect TINs and Backup Withholding Required

The IRS has ruled that, for interest payments to payees with missing or incorrect TINs, reporting under Code Sec. 6041 and backup withholding under Code Sec. 3406 was still required.

Backup Withholding. Backup withholding is required of taxpayers on certain non wage payments made to payees for whom an information return was filed which had either a missing or an incorrect taxpayer identification number (TIN) [Code Sec. 3406]. A TIN may be either a social security number (SSN) or an employer identification number (EIN).

Backup withholding rate.The backup withholding rate is the fourth lowest rate of tax under Code Sec 1(c) (tax rates for single individuals). The current rate is 24% [Code Sec. 3406 (a)(1)].

IRS ruling. The IRS found that the fact that the payments were based on amounts held in trust did not change the fact that backup withholding was required, because the type of trust at issue was not exempt from backup withholding. Further, the funds that were set aside but not yet received by payees whose whereabouts were unknown were also subject to reporting and backup withholding if those payees were entitled to receive funds on demand [Chief Counsel Advice 202252008].

State Roundup: Paid Family Leave Insurance Rate Information

2023 brings new rates for existing Paid Family Leave and Medical Leave Insurance (PFMLI) programs as well as new programs. Below is an overview of the 2023 PFMLI programs. 

California. Employers with five or more employers are required to participate in the state's PFMLI program. The state program provides up to _ weeks of leave. The program is funded through the state's disability program.

Colorado.  Beginning January 1, 2023, employers with 10 or more employees and their employees are required to contribute to the program at a rate of 0.45% of wages. For employers with 9 or fewer employees, only the employee contribution is required. The state's program, FAMLI, registration portal is open for employers now. Benefits will begin to be paid out in 2024.

Connecticut. The Connecticut Paid Leave program (CTPL) applies to employers with one or more employees. The program is funded solely through employee contributions. Employee contributions are 0.5% of wages subject to the 2023 Social Security wage base limit of $160,200. The maximum employee contribution for 2023 is $801.

Delaware. The state's PFMLI program will begin in 2025. 

District of Columbia. All employers subject to unemployment tax are required to participate in the PFMLI program. The program is funded solely by employee contributions. Employees contribute 0.62% of wages to the program.

Hawaii. The state does not have a PFMLI program, however, there is a temporary disability insurance (TDI) program that provides disability payments for some family leave reasons. 

Maryland. Employers with at least one employee and self-employed individuals are required to participate. Employers with 15 or more employees and their employees are required to contribute to the program. Only employees are required to contribute if they work for an employer with fewer than 15 employees. Contributions will begin October 1, 2023. The contribution rates have not yet been determined. Benefits will begin to be paid, beginning January 1, 2025. The state has contracted with Hartford as the administrator of the state's PFMLI program.

Massachusetts. Employers with 25 or more covered individuals (employees and independent contractors) and their covered individuals are required to make contributions to the state's PFMLI program. Employers are not required to contribute if they have fewer than 25 covered individuals. For 2023, the total contribution rate is 0.63% and is divided between medical and family contribution rates. Employers do not contribute for the family contributions. Employees pay up to 0.11% of wages. Employers subject to the medical contribution (those with 25 or more covered individuals) must contribute up to 0.312% of wages while their employees contribute 0.208%. 

New Hampshire. The state has a voluntary PFMLI program that allows employers and employees to elect to participate. Employers with 50 or more employees are required to collect worker premiums through payroll deductions. The plan is administered through MetLife and employers may use the MetLife Quote Calculator to explore plan options. 

New Jersey. The state's PFMLI program is funded solely by employee contributions. For 2023, employees contribute 0.06% on the first $156,800 of annual wages in 2023. Maximum annual contribution of $94.08. 

New York. Employers are not required to contribute to the state's PFMLI program. For 2023, employees must contribute  0.455% of wages, up to a maximum annual contribution limit of $399.43. 

Oregon. Contributions to the state's PFMLI began January 1, 2023. Employers with 25 or more employees are required to contribute 40% of the 1% contribution rate and their employees contribute 60% of the 1% contribution rate. Rates are subject to a wage cap of $132,900. Only the employee contributions are required for smaller employers. 

Puerto Rico. Puerto Rico does not have a PFMLI program, however, there is a disability insurance program that provides disability payments for some family leave reasons. 

Rhode Island. The state does not have a PFMLI program, however, there is a Temporary Disability Insurance (TDI) program that provides disability payments for some family leave reasons and also a Temporary Caregiver Insurance (TCI) program. Employers are not required to contribute towards the programs. No additional contribution is required for TCI which is funded through the TDI program. 

Vermont. Like New Hampshire, Vermont's PMFLI is voluntary. Employer contributions for state employees for the state's PFMLI program begin July 1, 2023. Public and private employers with two or more employees may begin voluntary contributions beginning July 1, 2024. Beginning July 1, 2025, individuals may begin contributing. The Hartford will administer the program.

Washington.  Contributions to the PMFLI program are divided into a family leave premium and a medical leave premium. The total premium for PFMLI is 0.8%. For 2023, the premium rate for employees is 72.76% or 0.8% up to the Social Security wage limit of $160,200. The premium rate for employers with 50 or more employees is 27.24% of 0.8%, up to $160,200 in wages, for the medical leave premium. 

OCSE Releases National Medical Support Order Form and Instructions

The Office of Child Support Enforcement (OCSE) has released an updated version of the National Medical Support Notice (NMSN) forms and instructions. The NMSN has two parts: 

  • Part A - Notice to Withhold for Health Care Coverage (OMB 0970-0222) for the employer to withhold any employee contributions required by the group health plan(s) in which the child(ren) is/are enrolled; and
  • Part B - Medical Support Notice to the Plan Administrator (OMB 1210-0113), which must be forwarded to the Administrator of each group health plan identified by the employer to enroll the eligible child(ren), or completed by the employer if the employer serves as the health Plan Administrator.

Background. The National Medical Support Notice (NMSN) is a federal form that all state child support enforcement agencies must use to enforce the health care coverage provisions in a child support order. The form serves as legal notice to the employer that the employee identified in the NMSN is obligated by a court or administrative child support order to provide medical coverage for the child(ren) identified in the notice. The NMSN has two parts: Part A (Notice to Withhold for Health Care Coverage), and Part B (Medical Support Notice to Plan Administrator). Part A notifies the employer to withhold employee contributions required by the group health plan(s) in which the child(ren) is/are enrolled. Part B must either be forwarded by the employer to the administrator of each group health plan identified by the employer to enroll the eligible child(ren) in medical coverage, or completed by the employer if the employer serves as the health plan administrator. 

There are no substantive changes to Part A or Part B of the NSMN. The OCSE had proposed changes to Part B of NMSN, however, the updated NMSN does not reflect any of the proposed changes. An Action Transmittal (AT-22-06) explains the OCSE has decided to grant an extension prior to making the proposed changes to allow time for child support agencies to implement the changes as based on the comments. A subsequent Action Transmittal will be issued regarding the NMSN revisions. 

Both Parts A and B expire on October 31, 2023.

President Biden Signs CAA 2023 Including Secure Act 2.0 and Other Payroll-Related Items

On December 29, 2022, President Biden signed the Consolidated Appropriations Act 2023 (CAA 2023) funding the U.S. government for fiscal year 2023, as reported by Reuters

The 4,000-plus page bill included the long-awaited Secure Act 2.0, a number of payroll-related items, as well as two provisions that provide protections to pregnant workers and nursing mothers in the workplace. 

For further information, see: 

  • What Employers Need to Know About SECURE 2.0 Provisions in $1.7 Trillion Spending Bill, 12/22/2022
  • Following House Approval, President to Sign $1.7 Trillion Spending Bill With Payroll-Related Provisions, 12/27/2022
  • Appropriations Bill Contains Pregnant Worker and Nursing Mother Protections, 1/3/2023
  • Checkpoint Exclusive: Executive Summary of the SECURE 2.0 Act, 1/3/2023

Appropriations Bill Contains Pregnant Worker and Nursing Mother Protections

On December 29, 2022, President Biden signed the Consolidated Appropriations Act of 2023 (CAA 2023). The more than 4,000-page piece of legislation was introduced in the U.S. Senate on December 20, 2022. The Senate approved the bill on December 22, 2022 with some Republican support. The U.S. House of Representatives approved the CAA 2023 on December 23, 2022 and sent the massive spending bill to Biden's desk for his signature.

The CAA 2023 contains a number of payroll and employer-related provisions. 

The CAA 2023 also included two provisions that protect pregnant workers and nursing mothers.

Pregnant Workers Fairness Act (HR 1065).The Pregnant Workers Fairness Act (PWFA) was passed by the House May 14, 2021. The PWFA requires employers with 15 or more employees to provide reasonable accommodations to qualified employees affected by pregnancy, childbirth, or related medical conditions unless it would impose an undue hardship on the employer's operations. Employers are further prohibited from denying employment opportunities if reasonable accommodations are required. Employers may not require qualified employees to take paid or unpaid leave if reasonable accommodations can be provided. The PFWA also provides enforcement procedures and remedies. The Equal Employment Opportunity Commission to promulgate regulations that provide examples of reasonable accommodations. The PFWA prohibits state immunity under the Eleventh Amendment to the Constitution from an action for a violation under the Act. Representative Jerrold Nadler, sponsor of the original bill, said: "With the Pregnant Workers Fairness Act­—which I have led in the House for over a decade—we can finally provide pregnant workers the peace of mind that they can stay on the job, provide for their families, and get the accommodations they need. Passing the Pregnant Workers Fairness Act is a monumental and historic victory for gender, racial, and economic justice."

Note: While the majority of states have laws on the books requiring employers to offer workplace accommodations, these laws vary in nature. Florida and Wyoming do not currently have pregnancy accommodation laws. See DOL webpage on Employment Protections for Workers Who Are Pregnant or Nursing.

PUMP for Nursing Mothers Act (HR3110). The Providing Urgent Maternal Protections (PUMP) for Nursing Mothers Act was passed by the House on October 22, 2021. The PUMP Act expands current protections for nursing mothers under the Fair Labor Standards Act (FLSA) by expanding coverage to exempt workers as well as cover categories of employees currently exempted from protections. Representative Carolyn Maloney, in a news release, said the Act would also cover categories of employees currently exempted from protections, such as teachers, nurses, and farmworkers. Finally, the Act would provide remedies for violations as available for FLSA violations.

Note:While many states have lactation accommodation laws, a number of states do not.  See DOL webpage on Employment Protections for Workers Who Are Pregnant or Nursing.

Checkpoint Exclusive: Executive Summary of the SECURE 2.0 Act

Racing against a winter storm, holiday travels, and a looming exhaustion of government funds, Congress passed a voluminous omnibus (Consolidated Appropriations Act, 2023) spending bill. The Secure 2.0 Act of 2022 (SECURE 2.0, or the Act) is part of the bill.

The bill was signed by President Biden on December 29, 2022. Checkpoint has produced an Executive Summary of the Act.

Among the key retirement provisions in the Act are:

  • Expanding automatic enrollment in retirement plans
  • Increasing the age for the required beginning date for mandatory distributions
  • A higher catch-up limit to apply at age 60, 61, 62, and 63
  • The elimination of the additional tax on corrective distributions of excess contributions.

The Act also includes a number of smaller non-retirement tax provisions including changes to ABLE accounts under Code Sec. 529A and modifications to the rules governing charitable conservation easements under Code Sec. 170.

Note that the Secure 2.0 Act, passed by the House back in March, never made it past the Senate.

State Roundup: 2023 Taxable Wage Base for Unemployment Tax

Each year, many states/jurisdictions make changes to the amount of wages subject to unemployment tax (taxable wage base) for reasons that include the solvency of their trust fund and unemployment benefit charges. Currently, the taxable wage base (TWB) will increase in 22 states, decrease in two states and remain the same in 23 states, and the District of Columbia. Note some state taxable wage bases are not adjusted annually and require state legislative action for an adjustment. Three states have not yet announced their taxable wage base for 2023. The federal taxable wage base remains $7,000. 

2023 Taxable Wage Base Limits

Note: Bold states and figures indicate an increase in 2023. Italicized states and figures indicate a decrease in 2023. TBD indicates that the figure is to be determined.

Alabama. $8,000

Alaska. $47,100

Arizona. $8,000

Arkansas. $10,000

California. $7,000

Colorado. $20,400

Connecticut. $15,000

Delaware. TBD ($14,500 in 2022)

District of Columbia. $9,000

Florida. $7,000

Georgia. $9,500

Hawaii. $56,700

Idaho. $49,900

Illinois. TBD ($12,960 in 2022).

Indiana. $9,500

Iowa. $36,100

Kansas. $14,000

Kentucky. $11,100

Louisiana. $7,700

Maine. $12,000

Maryland. $8,500

Massachusetts. $15,000

Michigan. $9,500 for all employers

Minnesota. $40,000

Mississippi. $14,000

Missouri. $10,500

Montana. $40,500

Nebraska. $9,000 ($24,000 for employers assigned the highest rate category)

Nevada. $40,100

New Hampshire. $14,000

New Jersey. $41,100

New Mexico. $30,100

New York. $12,300

North Carolina. $29,600

North Dakota. $40,800

Ohio. $9,000

Oklahoma. $25,700

Oregon. $50,900 

Pennsylvania. $10,000

Rhode Island. $28,200 ($29,700 for employers at the highest tax rate)

South Carolina. $14,000

South Dakota. $15,000

Tennessee. TBD ($7,000 in 2022)

Texas. $9,000

Utah. $44,800

Vermont. $13,500

Virginia. $8,000

Washington. $67,600

West Virginia. $9,000

Wisconsin. $14,000

Wyoming. $29,100

IRS Updates 1099-K FAQs

The IRS has updated its FAQs on Form 1099-K, Payment Card and Third-Party Network Transactions, to reflect its recent guidance that it will be postponing the implementation of the recently enacted $600 threshold rule [Fact Sheet 2022-41; IR 2022-230, 12/28/2022].

This past week, the IRS announced that calendar year 2022 will be treated as a transition year for the reduced reporting threshold of more than $600. For calendar year 2022, third-party settlement organizations who issue Forms 1099-K are only required to report transactions where gross payments exceed $20,000 and there are more than 200 transactions.

The FAQs show taxpayers how to report income that might be different from the amount shown on a Form 1099-K. They also explain how a taxpayer should reflect a 1099-K on their tax return if they feel the information on the form is incorrect.

Erin Collins, the IRS National Taxpayer Advocate, has added a blog about the postponement. 

State Payroll Tax News

Alaska—Unemployment Insurance Tax Newsletter Issued

The Alaska Department of Labor has issued its December newsletter. The newsletter notes that reports, payments received by Jan. 31 are eligible for FUTA tax reduction; and reviews successor employer responsibilities [Alaska Employer Newsletter, December 2022]. 

Arizona—Executive Order Requires State Agencies to Tackle Employment Discrimination

Executive Order 2023-01, signed by Governor Hobbs on January 2, 2023, directs state agencies to establish procedures aimed at tackling employment discrimination by April 1, 2023. The policies should focus on hiring, promotion, compensation, and tenure allocations that eschew discrimination based on race, color, sex, pregnancy, childbirth, medical conditions, political or religious affiliation, culture, creed, social origin, genetic information, sexual orientation, gender identity, national origin, ancestry, age, disability, military service, or marital status.

Arizona—Quarterly Unemployment Return Updated

The Arizona Department of Economic Security has updated the Unemployment Tax and Wage Report to include instructions for filing the return electronically via email at uitaccounting@azdes.gov. The updated return also reflects the increase to the taxable wage base from $7,000 to $8,000 as of January 1, 2023. 

California—Employee's Withholding Allowance Certificate Updated for 2023

The California Employment Development Department (EDD) has issued the 2023 version of its Form DE 4 (Employee's Withholding Allowance Certificate). The form has been updated with withholding brackets and exemption amounts to reflect 2023 rates.

Colorado—State Labor Department Makes Announcements for 2023

The Colorado Department of Labor and Employment's (CDLE) Division of Labor Standards and Statistics (DLSS) has announced several updates related to unemployment and labor. The following rules have been recently adopted and took effect on January 1, 2023: (1) 2023 Publication And Yearly Calculation Of Adjusted Labor Compensation (2023 PAY CALC); (2) Colorado Whistleblower, Anti-Retaliation, Non-Interference, And Notice-Giving (Colorado WARNING Rules); (3) Wage Protection; (4) and Prevailing Wage And Residency (PWR). Also, recent CDLE guidance has been published, which includes the: (1) Colorado Overtime & Minimum Pay Standards Order (COMPS Order) #38; (2) DLSS Wage Claim Investigation Process; (3) Paid Leave under the Healthy Families and Workplaces Act (“HFWA”); (4) Agricultural Employee Rest Periods, Meal Periods, and Service Provider Access; (5) Deductions From, and Credits Towards, Employee Pay; and (6) Overtime and Minimum Wage Obligations for Agricultural Employment. In addition, the CDLE has an updated version of its COMPS Order (Colorado Overtime and Minimum Pay Standards Order) mainly updated with 2023 minimum wage and salary figures.

Colorado—State Adopts Minimum Wage and Overtime Order for 2023

The Colorado Department of Labor and Employment has adopted new rules for 2023 regarding overtime and minimum wage and adjusted labor compensation and wage protection rules. The minimum wage rate for Colorado is to be $13.65 per hour. The amount of minimum wage that employers must pay to tipped employees is to be $10.63 per hour in 2023. The minimum wage rate for non-emancipated minors will be $11.61 per hour in 2023. The minimum pay for agricultural range workers is to be $559.29 per week. Effective January 1, 2023, the weekly overtime exempt salary is $961.54 for the Executive, Administrative, or Professional (EAP) exemption. Computer professionals must receive at least $31.41 per hour in 2023 to qualify for the overtime exemption. 

Georgia—Expiration of Unemployment Tax Administrative Assessment

Effective January 1, 2023, the unemployment tax administrative assessment expired. This tax had been in place for several decades. It was last reauthorized by the Georgia Legislature through December 31, 2022. The Georgia state legislature decided not to renew this tax in the most recent legislative session. Therefore, the Administrative Assessment portion of an employer's total tax rate for 2023 will reflect 0.00% to replace the previous Administrative Assessment of 0.06%. According to the Georgia Department of Labor (GDOL), with the elimination of the administrative assessment, there is an accompanying change in the base employer tax rates from the base rate tables, which may result in a small total tax rate increase for employers. The GDOL recommends registering for its Employer Portal for unemployment tax rate information. The GDOL also notes that the annual unemployment tax rate notices are available on the Employer Portal and states that these rate notices will not be mailed to employers.

Illinois—Filing Requirements for Issuers of Forms 1099-K

The Illinois Department of Revenue has revised Publication 110, Forms W-2, W-2c, W-2G, and 1099 Filing and Storage Requirements for Employers and Payers, including 1099-K Electronic Filing Requirements, to update 1099-K information. For the 2020 and 2021 reporting periods, payers are required to submit Forms 1099-K issued to a payee with an Illinois address electronically if required by the IRS to electronically file Forms 1099-K, or the payee has four or more separate transactions and the cumulative total exceeds $1,000. For 2019, and starting again with reporting periods beginning on or after January 1, 2022, payers are only required to submit Forms 1099-K issued to a payee with an Illinois address electronically if required by the IRS to electronically file Forms 1099-K  [Publication 110, Forms W-2, W-2c, W-2G, and 1099 Filing and Storage Requirements for Employers and Payers, including 1099-K Electronic Filing Requirements, Ill. Dept. Rev., 01/01/2022 (revised 12/2022)].

Kentucky—Harrodsburg Occupational Tax Rate Change

The City of Harrodsburg has increased its occupational tax rate from 1% to 1.5%, effective October 1, 2022, beginning with the fourth quarter 2022 returns due January 31, 2023. The Quarterly License Return has not yet been updated on the Harrodsburg website. Contact the Occupational License Administrator for an updated form at (859) 734-2225.

Maine—Court Rules Wage Payment Laws Violated for Employee Phishing Scam Victim

The Maine Supreme Judicial Court has ruled that an employer violated Maine wage payment and minimum wage laws by failing to pay owed wages after a phishing attack. An employee's paycheck was deposited into a bank account controlled by cybercriminals who had stolen the employee's username and password to the online portal she designated payroll information. In June 2018, nearly 600 employees were victims of an email phishing scam that routed an employee to a fake employee portal where the username and password would then be entered and stolen. Cybercriminals then used the information to change the designated routing and account information to steal an employee's wages. The employer was informed by employees that they had not received their direct deposited wages and an investigation revealed that the paychecks were deposited into an account controlled by cybercriminals. The employer then only returned a portion of the employee's wages and refused to issue a check for the remaining wages. The employer argued that the wages were not owed because it should be entitled to rely on the cybercriminals' use of the employee's login credential. The court did not agree and reasoned that the employee did not request the change as opposed to the cases that the employer cited where the employees made the requested changes [Dorsey v. Northern Light Health et al., Me. Sup. Jud. Ct, Dkt. No. BCD-22-4, 12/20/2022].

Maine—2023 Unemployment Tax Information

The Maine Department of Labor has updated its Annual Rate Category/Employer Array with rates for contributing experienced and new employers for the year 2023. Adjusted unemployment tax rates range from 0.00% to 5.47%. Unadjusted tax rates range from 0.74% to 6.37%. The new employer rate will decrease from 2.45% to 2.19%. The above rates include the Competitive Skills Scholarship Fund (CSSF) rate of 0.07% and unemployment program administrative fund (UPAF) rate of 0.15%. The taxable wage base remains at $12,000.

Maryland—2023 Withholding Guide Issued

The Maryland Department of Revenue has issued the Employer's Withholding Guide for 2023. The guide includes the percentage formulas to determine the amount of income tax to withhold from employees' wages. The withholding regular tables are not contained in the Guide. Those tables are located at: https://www.marylandtaxes.gov/. The Guide does include local income tax rates.

Massachusetts—Employer Medical Assistance Contribution Rate Released for 2023

The Employer Medical Assistance Contribution, or EMAC, must be paid on the first $15,000 of each employee's wages annually. This requirement applies only to employers with 6 or more employees. Employers are not liable for EMAC for up to 3 years after becoming subject to the unemployment insurance law ("newly subject"). The rates remain the same for 2023. In 2023, employers in their fourth year of being subject will pay 0.12% of the first $15,000 of each employee's wage; employers in their fifth year will pay 0.24%; and employers who have been subject for six or more years will pay 0.34% of covered employee wages [Massachusetts Department of Unemployment Assistance, Learn about the Employer Medical Assistance Contribution].

Michigan—Detroit Income Tax Telecommuting FAQs Updated

The Michigan Department of Treasury has updated frequently asked questions (FAQs) relating to the application of city (Detroit) individual income tax to wages earned while telecommuting. The FAQs note that if a taxpayer is a Detroit resident, all income earned by that taxpayer is subject to Detroit tax, no matter where it is earned. Wages earned by a nonresident of Detroit, who is working from home (telecommuting) at a location outside of the city is not taxable by Detroit. However, any wages earned by a nonresident while working within the City of Detroit are taxable. If a taxpayer is a nonresident of Detroit and earned income while both in the city and outside the city, all wages earned while working in the City of Detroit are taxable. Nonresidents should file using the City of Detroit Nonresident Income Tax Return (Form 5119), and include the City of Detroit Withholding Tax Schedule (Form 5121), and complete part 3. Nonresidents should keep a work log of the days worked outside the city to help allocate telecommuting wages to nontaxable income. Employers should provide employees with a letter, on company letterhead, stating the dates that employees were directed to work from home. The employees are not required to submit the work log and employer letter with a city income tax return, but taxpayers should still retain the documents and may be required to furnish the documents upon request by a city tax administrator. The FAQs also state that the stimulus payment is not considered income and therefore not included in a taxpayer's federal Adjusted Gross Income (AGI) which is used to determine taxable income for the City Resident Income Tax Return (Form 5118). It should also not be included when calculating taxable income on the City of Detroit Nonresident Income Tax Return (Form 5119) or the City of Detroit Part-Year Resident Income Tax Return (Form 5120) [City Income Taxes and Telecommuting FAQ, Mich. Dept. Treas., 12/01/2022].

Michigan—Adoption Leave Tax Credit Implementation Delayed

The Michigan Department of Treasury has announced that the adoption leave tax credit provided for in L. 2022, P.A. 207 ("PA 207") will not become effective on January 1, 2023, because the necessary funding has not been appropriated by the legislature  [Notice to Taxpayers Regarding Public Act 207 of 2022 (Adoption Leave Tax Credit), Mich. Dept. Treas., 12/29/2022].

Minnesota—2023 Withholding Guide and Tables Released

The Minnesota Department of Revenue (DOR) has issued its updated Withholding Tax Instructions booklet for 2023 which includes the 2023 withholding tax tables and withholding formula information. The value of a withholding allowance has increased to $4,800 in 2023 ($4,450 in 2022). For 2023, the interest rate will increase from 3% to 5%. The supplemental tax rate remains 6.25%. 

Mississippi—Withholding Tax Information for 2023 Released

The withholding tax tables for 2023 are available on the Mississippi Department of Revenue's website. These include daily, weekly, bi-weekly, semi-weekly, and monthly tables. The withholding computer payroll accounting publication for 2023 is also available.

Nevada—Unemployment Contribution Rates and Taxable Wage Base Announced

The Nevada Department of Employment, Training and Rehabilitation's (DETR) Employment Security Division (ESD) has issued unemployment tax rate information for 2023. The new employer tax rate continues to be 2.95%. The unemployment tax rate range for experienced employers continues to be from 0.25% to 5.4% (consists of 18 rate classes). An experienced employer's unemployment tax rate is determined by a reserve ratio formula. Each year, DETR issues a regulation for the unemployment contribution rates. The reserve ratio range changes from year to year. So, while the unemployment tax rates continue to range from 0.25% to 5.4% in 2023, an employer's tax rate may change based upon the new reserve ratio changes for the 18 rate classes. In addition, employers (except those assigned the maximum 5.4% tax rate) pay a 0.05% career enhancement program tax. Employers pay unemployment taxes up until the state's annual taxable wage base has been reached. For 2023, that wage base is $40,100 [Nevada Employment Security Division, Unemployment Insurance Information].

Nevada—Tax Commission Updates Appeals Procedures

The Nevada Tax Commission (NTC) has amended its regulation concerning the filing of certain briefs and other documentation in an appeals proceedings. The amended regulation prescribes the period for the filing of an answering brief by a respondent and a reply brief by the appellant, and it requires a brief or other filed document to be accompanied by an acknowledgement or affidavit showing service on all other parties of record. The regulation also authorizes the NTC to dismiss an appeal if certain documentation is not timely filed. The regulation (LCB File No. R175-22) was approved by the Nevada Legislative Commission and was filed on December 29, 2022. 

New Mexico—State Announces 2023 Unemployment Reserve Factor and New Employer Rates

The New Mexico Department of Workforce Solutions (DWS) has released additional 2023 unemployment tax information. The DWS reports that the 2023 reserve factor is 3.3445. This factor is a value that represents the health of the state's unemployment trust fund and used to calculate a contributing employers’ annual unemployment tax rates. New employer unemployment tax rates vary by industry. For 2023, the new employer rate is 1.00% for most industries, except 1.06% for agriculture, forestry, fishing, and hunting and 1.12% for public administration (government entities) [How UI Tax Rates Are Calculated].

New York—IRS Provides Tax Relief for Taxpayers Affected by Winter Storm

The IRS has announced tax relief for victims of the December storm in Erie and Genesee counties. Taxpayers affected by the storm beginning December 23, 2022, now have until April 18, 2023, to file various business tax returns and make tax payments. Certain deadlines falling on or after December 23, 2022, and before April 18, 2023, are granted additional time to file through April 18, 2023. This includes the quarterly payroll and excise tax returns normally due on January 31, 2023. Additionally, penalties on payroll and excise tax deposits due on or after December 23, 2022, and before Jan. 9, 2023, will be abated as long as the tax deposits were made by January 9, 2023. The notice explains that if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date that falls within the postponement period, the taxpayer should call the telephone number on the notice to have the IRS abate the penalty. Taxpayers should also note that the IRS automatically identifies taxpayers located in the covered disaster area and applies filing and payment relief, but affected taxpayers who reside or have a business located outside the covered disaster area should call the IRS disaster hotline at 866-562-5227 to request this tax relief [NY-2022-09, 12/29/2022].

Ohio—State Court of Appeals Finds Emergency COVID Legislation Valid in Nonresident Remote Worker Municipal Income Tax Case

A provision in L. 2020, H197—Section 29—that allowed the municipalities where the taxpayers' employers are located to tax their income, despite the fact the taxpayers neither resided in nor physically worked in those cities, did not violate the taxpayers' due process rights under the U.S. or Ohio Constitutions. As a response to the COVID-19 crisis, the Governor issued a stay-at-home order (Executive Order 2020-01D).  As part of a bill designed to address the effects of the COVID crisis, the General Assembly passed Section 29, which provided that any day on which an employee performs personal services at a location, including the employee’s home, which the employee is required to report for employment duties because of the declaration is deemed to be a day performing personal services at the employee’s principal place of work. When executive order 2020-01D and the stay-at-home order went into effect, the taxpayers each began working from home instead of their employer’s usual place of business. In other words, none of the taxpayers lived in the city where they worked, but the cities nevertheless withheld City of Oregon income taxes. The court found that the General Assembly had the authority to enact Section 29 and the provision was not an unconstitutional imposition of an extraterritorial tax. By requiring that employees 'be deemed" to be working from their principal place of work when they were working elsewhere due to Executive Order 2020-01D and the stay-at-home order, the legislature imposed an additional administrative requirement on the collection of local income taxes that was limited to "the period of the emergency declared by Executive Order 2020-01D,... and for thirty days after the conclusion of that period...." The court also found that Section 29 is not facially invalid under the Due Process Clause of the U.S. Constitution. (Curcio et al. v. Hufford, et al., Ohio Ct. App., Dkt. No. L-22-1009, 12/29/2022.)

Oregon—2023 Unemployment Tax Information

A spokesperson for the Oregon Employment Department (OED) has confirmed with Thomson Reuters that unemployment tax rates for experienced employers will continue to range from 0.9% to 5.4%. New employers will pay 2.1% (2.4% in 2022). The 2023 taxable wage base is $50,900 ($47,700 in 2022). The special payroll tax offset is 0.09% for all four quarters of 2023 except for employers assigned a 5.4% tax rate. Please note that L. 2021, H3389 provides that the experience rating used to determine an employer’s 2020 tax rate will also be used in 2022, 2023, and 2024.

Oregon—2023 Employee Withholding Certificate and Instructions Released

The Oregon Department of Revenue (DOR) has issued its state-specific Form OR-W-4 (Oregon Withholding Statement and Exemption Certificate) and instructions for 2023. The instructions have worksheets for: (a) personal allowances; (b) deductions, adjustments, credits, and nonwage income; and (c) two-earners/multiple jobs. Employees must use Form OR-W-4 to claim or change withholding allowances or to claim exemption from Oregon withholding, if: (1) the employed filed a federal Form W-4 with the employer after December 31, 2017 that didn’t specify withholding allowances for Oregon and Form OR-W-4 was not filed; or (2) there is a recent personal or financial change that impacts income such as filing status or number of dependents. The instructions note that terms such as "pay," "paycheck," and "wages" also refer to pensions, annuities, and other periodic payments, and the word "employer" also refers to other payers. Taxpayers that claim exemption from Oregon withholding must submit a new Form OR-W-4 by February 15 of each year to continue to qualify for the exemption. The DOR offers the Oregon Withholding Calculator on its website to assist in determining more accurate estimated withholding.

Washington—Unclaimed Property Guide Updated

The Washington Department of Revenue (DOR) has released an updated Guide to Reporting Unclaimed Property. Holders of unclaimed property must file and remit unclaimed wages issued or with a last activity date of July 1, 2021 through June 30, 2022, on or before October 31, 2023. Electronic filing and payment are required. Wages, paychecks, and payroll cards are considered unclaimed after one year. Holders may file property of out-of-state addresses (except California) with a Washington Unclaimed Property Report if it includes 10 or fewer properties, totaling $1,000 or less per state. Dormancy periods of the specific state would continue to apply.