Tax Reform Legislation Will Affect Payroll

On December 22, President Trump signed H.R. 1, also known as the Tax Cuts and Jobs Act, into law. The legislation, which marks the most sweeping tax changes in 30 years, will affect payroll professionals by changing the taxability of two fringe benefits and affecting income tax withholding in 2018 and beyond.

The IRS recently released the new tax withholding tables that reflect the new tax rates for individuals. Lawson has been updated to include these new tax tables. As a result, you may see a change in your paycheck beginning on February 9 for bi-weekly employees and February 15 for monthly employees.

No action is required by employees as a result of this change. We will use the W-4 forms already on file to adjust your withholding to reflect the tax changes. However, employees may update their withholding elections at any time by submitting a new Federal W-4 form to Human Resources.

In addition to the income tax withholding changes, there are some fringe benefit changes related to qualified moving expenses. Through 2017, the Internal Revenue Code provides an exclusion from employees’ income for qualified moving expense payments and reimbursements made by employers. This fringe benefit will be suspended, except for military-related moving expenses, for tax years 2018 through 2025.

Please visit the IRS FAQ site for additional information.

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