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Date: January 14, 2016

Bulletin Number: 1455

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Subject

Summary of Tax Related Changes for 2016

Purpose

To inform agencies of the updated IRS tax withholding requirements for 2016 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 7, 2016 and Administration paychecks dated January 13, 2016.

Background

For 2016, changes have been made to:

  • Withholding Allowance Amount
  • Qualified Parking Benefits
  • Qualified Transit Pass
  • Mileage Rates
Tax Rates

The Federal income tax withholding rates have changed for 2016.  The withholding tables can be found in IRS Publication 15 (Circular E), Employer’s Tax Guide for use in 2016.

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 is $2,250 for 2016.

The New York State and Yonkers withholding tax tables have been revised for 2016.

Personal Exemptions/Withholding Allowances (Federal/NYS/NYC/Yonkers)

The personal exemption/withholding allowance amount has increased to $4,050 for 2016.

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 2016 remains the same at $118,500 (max tax $7,347).  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.

Qualified Parking Benefits

The maximum exclusion from gross income for qualified parking benefits will be $255 per month in 2016.

Qualified Transit Pass

The maximum from gross income for qualified transportation benefits is $255 per month in 2016.

Mileage Rates

The standard mileage rate for computing the value of personal use of an employer provided vehicle is $.54 cents per mile in 2016.

OSC Actions

OSC has updated PayServ with the new IRS requirements for 2016.

Agency Actions

Informational only.  Please inform your employees.

Questions

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