HR Compliance

North Dakota Alters Income Withholding Tables

By

Robert Barclay

| Jul 1, 2015

In an effort to reduce income taxes for individuals, North Dakota’s governor recently signed Senate Bill 2349 which will retroactively reduce both individual and corporate taxes retroactive to January 1, 2015.

Subsequently, the North Dakota tax commissioner released new withholding tables in “North Dakota 2015 Income Tax Withholding Rates & Instructions, rev. June 2015” to correspond with the statutory tax cut.

Within the publication are two withholding methods available to employers:

Method One: Percentage of Wages

The percentage of wages method is widely recommended for all employers, but especially for organizations that process payroll through an outside vendor. This method is similar to the percentage method in place for federal income tax withholding passed down from the IRS’, Employer’s Tax Guide. In the new tables, withholding amounts that are less than $1 are not required to be withheld, and employees are able to withhold additional income tax.

Method Two: Withholding Tables

The second method is recommended for smaller companies that process their payroll manually. This method is similar to the wage bracket method described in the IRS’, Employer’s Tax Guide. With method two, non-computerized organizations that issue manual payroll checks can utilize the new tables in order to calculate the appropriate withholding amounts.

Going Forward

Despite the changes in withholdings, organizations are not required to adjust withholding amounts to paychecks already issued. The law also does not require employers to withhold future amounts to account for any over withholdings that may have occurred in previous pay periods.

Under the new tax withholding guidelines, single and married employees alike should benefit by taking home more money with each paycheck.

With this potential change in mind, companies need to be equipped with the proper technology that can quickly accommodate new developments in order to maximize efficiency throughout the workforce. For users of the Paycom system, these changes have been implemented within the system, and employees should notice slightly larger take-home pay going forward.

About the Author

Robert Barclay

Robert Barclay has been the Tax Research Team Lead at Paycom since 2012, and has been instrumental in such company projects as the development of its Affordable Care Act compliance product, implementation of geolocation services and redesign of Form W-2. He joined Paycom in 2011, bringing more than 20 years of experience with the capital markets consulting practices of Ernst & Young in Memphis, Tenn., and Birmingham, Ala.; and Causey Demgen & Moore in Denver, Colo. A native Oklahoman, Barclay is a graduate of Rhodes College in Memphis, where he played football as linebacker.

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