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Date:December 31, 2007
Bulletin Number: 775
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Subject

Summary of Tax-Related Changes for 2008

Purpose

To advise agencies of tax-related changes for 2008.

Affected Employees

Employees meeting the criteria as explained in this bulletin.

Effective Date(s)

New rates will be reflected in Institution paychecks dated January 3, 2008 and Administration paychecks dated January 9, 2008.

Background

For 2008, changes have been made to:

  • Federal Income Tax Withholding Rates
  • Social Security/Medicare Taxes
  • Federal Earned Income Tax Credits
  • Qualified Parking Benefits
  • Qualified Transit Pass
  • Mileage Rates
Tax Rates

There are changes to the Federal withholding tax rates for 2008.  The result of these changes is a small decrease in the amount of withholding tax.

There are no changes to the New York State, City of New York and City of Yonkers resident income tax withholding rates for 2008.  According to the NYS Department of Taxation and Finance, the rates will remain the same as the 2006 rates.

To obtain a copy of Publication 15, Circular E, Employer’s Tax Guide, contact the Internal Revenue Service at 800-829-3676 or visit their website at www.irs.ustreas.gov and select More Forms and Publications>View online:Tax Publications>Publication 15.

The New York State, City of New York and City of Yonkers resident income tax withholding rates can be found in Publication NYS-50-T.  To obtain a copy of this publication, visit the NYS Department of Taxation and Finance website at www.tax.ny.gov and select Publications and Bulletins>Tax Type:Withholding>NYS-50-T.

Personal Exemptions (Federal)

The personal and dependency exemptions amount will increase to $3,500 for 2008.

Social Security and Medicare Taxes

The Social Security tax for 2008 will be calculated at 6.2% on the first $102,000 of taxable wages resulting in a maximum Social Security tax deduction of $6,324.  The Medicare tax rate remains at 1.45%.  There is no limit on the amount of wages subject to Medicare tax.

Federal Earned Income Tax Credits

Employees whose wages are less than $33,995 ($36,995 if married filing jointly) and expect to have one (1) qualifying child may be eligible for an advance payment of Earned Income Credit (EIC), with a maximum credit of $1,750.  The new tables for calculating the credits are included in the IRS Publication 15, Circular E, Employer’s Tax Guide.

Eligible employees must complete a new Form W-5, Earned Income Credit Advance Payment Certificate each year.  Copies of the form may be obtained from the IRS.

Refer to Payroll Bulletin No. 767 for specific instructions.

Qualified Parking Benefits

The maximum amount allowed as exclusion from gross income for qualified parking benefits will be $220 per month in 2008 (increased from $215 per month in 2007).

Qualified Transit Pass

The maximum amount allowed as exclusion from gross income for qualified transportation benefits is $115 per month (increased from $110 per month in 2007).

Mileage Rates

The standard mileage rate applicable for 2008 under the cents-per-mile rule to compute the value of personal use of a vehicle provided to an employee is 50.5 cents per mile.

Questions

Questions regarding this bulletin may be directed to the Payroll Deduction mailbox.