Purpose

The purpose of this bulletin is to inform agencies of the updated IRS (Internal Revenue Service) tax withholding requirements for 2022 and other tax related topics.

Affected Employees

Employees meeting the criteria as explained in this bulletin are affected.

Effective Dates

Effective January 1, 2022 through December 31, 2022.

OSC Actions

OSC has updated PayServ with the new Federal and New York tax requirements for 2022. OSC continues to use the Percentage Method on an Annual payroll period for income tax withholding purposes.

Agency Actions

Agencies must notify employees who meet the criteria outlined in this bulletin.

Summary of Changes

To date, the IRS has issued guidance on changes to the following areas for 2022:

• Withholding Rates, and Tax Brackets
• Additional Withholding Adjustment for Nonresident Aliens
• Supplemental Wage Withholding Flat Rate
• Social Security Wage Base Limit
• Contribution Limits on Pension/Retirement Plans
• Qualified Transportation and Parking Fringe Benefits Limit
• Mileage Rates
• Individual Taxpayer Identification Number (ITIN) Renewal/Expiration
• Adoption Credits

Tax Rates

Federal Tax Withholding Rates

All Federal tax withholding rate changes were updated and effective the first paycheck of January 2022.

Federal Withholding Allowance

Per IRS Publication 15-T, withholding for employees with the 2019 version of Form W-4 or earlier will be calculated using $4,300 for each allowance. New employees, rehires, and employees changing their withholding must use the newest Form W-4, which does not use allowances. Please refer to Payroll Bulletin No. 1800.1 for more information.

New York Tax Withholding Rates

2022 New York State and Yonkers withholding tax tables have been updated. No updates are required for New York City at the time of this bulletin issuance.

New York State, New York City, and Yonkers Withholding Allowance

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

Additional Withholding Adjustment for Nonresident Aliens

Withholding of federal income tax on the wages of nonresident alien (NRA) employee is subject to an additional withholding amount which is added to NRA employees’ wages for calculating federal income tax. The additional withholding amount added to annual income has increased to $8,650 for 2022 if the NRA employee was first paid wages before 2020 and has not submitted a new Form W-4 for 2020 or later. If the NRA employee was first paid wages in 2020 or later or has submitted a new Form W-4 for 2020 or later, then the additional withholding amount added to annual income is increased to $12,950.  This procedure does not apply to NRA students from India.

Supplemental Wage Withholding

OSC uses the Aggregate method for Supplement Wage Withholding.

Note: This is provided for informational purposes only.

Social Security & Medicare Wage Base and Tax Rate Information

The Social Security wage base limit for 2022 has increased to $147,000 (max tax $9,114). 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 paid only by employees.

Contribution Limits on Pension/Retirement Plans

403(b) and 457 Deferred Compensation

The annual contributions limit has increased to $20,500 for 2022. Please refer to Payroll Bulletin Nos. 1972 and 1976 for additional information.

Pre-Tax Benefits

Qualified Parking Benefits

The maximum exclusion from gross income for qualified parking benefits has increased to $280 per month in 2022.

Qualified Transit Pass

The maximum exclusion from gross income for qualified transportation benefits has increased to $280 per month in 2022.

Milage Rates

The standard milage rate used when calculating the value of personal use of an employer provided vehicle has increased from 56 cents per mile to 58.5 cents in 2022.

ITIN Renewal/Expiration

Unused ITINs – ITINs not used on a federal income tax return in the previous three years (covering 2018, 2019, or 2020) will no longer be valid to use on a tax return as of January 1, 2022. ITIN holders in this group who need to file a tax return in 2022 will need to renew their ITINs. The renewal period began October 1, 2021.

Expired ITINS – ITINs with the middle digits of 83, 84, 85, 86, 87, or 88 (Example: 9XX-83-XXXX expired at the end of 2021. The renewal period for these ITINs began October 1, 2021. ITINs with the middle digits of 70-82 can be renewed at any time by submitting a completed IRS Form W-7. The IRS will contact those who need to renew their ITINs, indicating whether they need to file a tax return and explain steps they need to take to do so.

Adoption Credits

Although the 2022 IRS limit is set at $14,890, the State payroll deduction limit, as determined by the Governor’s Office of Employee Relations (GOER), is set at $14,440 for the 2022 calendar year.

Questions

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