Date: January 18, 2017

Bulletin Number: 1542

Subject Summary of Tax Related Changes for 2017

Purpose To inform agencies of the updated IRS tax withholding requirements for 2017 and other related topics.

Affected Employees Employees meeting the criteria as explained in this bulletin.

Effective Date(s) New tax withholding rates will be reflected in Institution paychecks dated January 5, 2017 and Administration paychecks dated January 11, 2017.

Background For 2017, changes have been made to:
  • Withholding – Additional Amount for nonresident aliens
  • Social Security Wage Base Limit
  • Mileage Rates
  • Individual Taxpayer Identification Number (ITIN) - Renewal/Expiration

Tax Rates The Federal income tax withholding rates have changed for 2017.  The withholding tables can be found in IRS Publication 15 (Circular E), Employer’s Tax Guide for use in 2017.

To access this publication, visit the Internal Revenue Service website at  https://www.irs.gov/pub/irs-pdf/p15.pdf

The withholding of federal income tax on the wages of nonresident alien employees is subject to an additional amount that is added to nonresident alien employees’ wages for calculating Federal income tax.  The additional amount to annual income has increased to $2,300 for 2017.

The New York State and Yonkers withholding tax tables have been revised for 2017.

Personal Exemptions/Withholding Allowances (Federal/NYS/NYC/ Yonkers) The personal exemption/withholding allowance amount remains at $4,050 for 2017.

The value of one New York State, New York City and Yonkers withholding allowance remains at $1,000.

Social Security & Medicare Wage Base and Tax Rate Information The Social Security wage base limit for 2017 has increased to $127,200 (max tax $7,886.40).  There is no limit on the amount of wages subject to Medicare tax.  The Social Security tax rate of 6.2% and Medicare tax rate of 1.45% remain the same.

Employees receiving income in excess of $200,000 will be subject to an additional Medicare Tax of .9%.  The additional tax applies only to income above the $200,000 threshold and is only paid by employees.

Qualified Parking Benefits The maximum exclusion from gross income for qualified parking benefits remains at $255 per month in 2017.

Qualified Transit Pass The maximum from gross income for qualified transportation benefits remains at $255 per month in 2017.

Mileage Rates The standard mileage rate for computing the value of personal use of an employer provided vehicle is 53.5 cents per mile in 2017.

ITIN Renewal/Expiration Unused ITINs – ITINs not used on a federal income tax return in the last three years (covering 2013, 2014 or 2015) will no longer be valid to use on a tax return as of January 1, 2017.  ITIN holders in this group who need to file a tax return for 2017 will need to renew their ITINs.  The renewal period began October 1, 2016.

Expired ITINs – ITINs issued before 2013 began expiring October 1, 2016 and taxpayers will need to renew them on a rolling basis.  The first ITINs that will expire are those with the middle digits of 78 and 79 (Example: 9XX-78-XXXX).  The renewal period for these ITINs began October 1, 2016.  The IRS will mail letters to this group to inform them of the need to renew their ITINs if they need to file a tax return and explain steps they need to take.  The schedule for expiration and renewal of ITINs that do not have middle digits of 78 and 79 will be announced at a future date.

OSC Actions OSC has updated PayServ with the new IRS requirements for 2017.

Agency Actions Informational. Please inform your employees.

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