Purpose

To inform agencies of the new changes to Federal tax withholding rates for 2009.

Affected Employees

Employees who claim single with a gross income of $75,000 or less, employees who claim married and have a gross income of $150,000 or less, and nonresident alien employees who earn wages that are subject to federal income taxes

Effective Date(s)

Paychecks dated March 18, 2009 (Administration) and paychecks dated March 26, 2009 (Institution)

Background

The new withholding rates are a result of the Making Work Pay provision of the American Recovery and Reinvestment Act of 2009.  According to the IRS, this provision may provide a tax credit of up to $400 for employees who claim single and up to $800 for employees who claim married.

Nonresident alien employees who earned income subject to Federal taxes could see an increase in their Federal withholdings.  The amount added to a nonresident alien’s wages to calculate their Federal withholding has increased from $102.00 to $276.00 (biweekly).

Note:  High-income individuals, employees with multiple jobs or married couples with combined incomes should review their withholding allowances to ensure sufficient withholding of Federal taxes.

The new withholding rates appear in IRS Publication 15-T at www.irs.gov.

Agency Actions

Agencies are requested to share Comptroller DiNapoli’s message with employees.  Please utilize your agency Intranet site or other electronic distribution method for dissemination of this information.

Questions

Questions regarding this bulletin may be directed to the Tax and Compliance mailbox.