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Date:December 28, 2006
Bulletin Number: 690
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Subject

Summary of Tax-Related Changes for 2007


Purpose

To advise agencies of tax-related changes for 2007.

Affected Employees

Employees meeting the criteria as explained in this bulletin.

Effective Dates

New rates will be reflected in Institution paychecks dated January 4, 2007 and Administration paychecks dated January 10, 2007.

Background

For 2007, 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
Tax Rates

There are changes to the Federal withholding tax rates for 2007.  According to the NYS Department of Taxation and Finance, the New York State, City of New York, and City of Yonkers resident income tax withholding 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 on Line>Tax Publications>Publication 15.

The New York State, City of New York, and City of Yonkers resident income tax withholding rate changes 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 $3,400 for 2007.


Social Security and Medicare Taxes

The Social Security tax for 2007 will be calculated at 6.2% on the first $97,500 of taxable wages resulting in a maximum Social Security tax deduction of $6,045.00.  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 $33,241 ($35,241 if married filing jointly) may be eligible for an advance payment of Earned Income Credit (EIC), with a maximum credit of $1,712.  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. 679 for specific instructions.
 

Qualified Parking Benefits

The maximum amount allowed as exclusion from gross income for qualified parking benefits will be $215 per month in 2007 (increased from $205 per month in 2006).

Refer to Payroll Bulletin No. 573 for additional information and specific instructions.

Qualified Transit Pass

The maximum amount allowed as exclusion from gross income for qualified transportation benefits is $110 per month.

Questions

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