Do you operate a business in the Twin Cities or other parts of Minnesota? Are you managing payroll internally? If so, it will interest you to know that effective June 20th, 2013, the amount employers are required to withhold from employee pay changed. Recently the state implemented a new personal income tax bracket to correspond with changes approved by the legislature earlier this year. This means that some employees will now be placed in a 9.85% state income tax bracket. Foreman & Airhart wants our clients, prospects and others to be aware of the changes to ensure proper compliance. Below we have provided additional information on which taxpayers will be affected.
Affected Minnesota Taxpayers
Taxpayers in the following income brackets are subject to the new 9.85% withholding tax. These include:
- Married couples filing joint returns that earn $250,000 or greater in annual income
- Married couples filing separate returns that earn $125,000 or greater in annual income,
- Individuals filing as head of household that earn $200,000 or greater in annual income, and
- Individuals filing as single with $150,000 or greater in annual income.
New Rates are Retroactive
It’s essential to note that the new tax rates are retroactive to the beginning of 2013. This means anyone subject to the new tax bracket has to be sure they have paid the 9.85% on all income earned in 2013. Since the formula was not released until this month it is possible some individuals will need to change their withholding amount to ensure they don’t owe additional tax at the end of the year. As a result, you may want to ensure affected employees are aware of this obligation.
For additional information on how the new withholding rates or for assistance with implementation contact us today. For additional information please call Mark Foreman, CPA, at 952-948-1844, or click here to contact Mark.