2023 Federal Income Tax Withholding

The 2023 federal income tax withholding methods were released by the Internal Revenue Service.

• The percentage method‘s tax brackets were adjusted.

• The annual additional amount, if the nonresident alien employee was first paid wages before 2020 and has not submitted a Form W-4 for 2020 or later, increases from $8,650 to $9,550.

• The annual additional amount, if the nonresident alien employee has submitted a Form W-4 for 2020 or later or was first paid wages in 2020 or later, increases from $12,950 to $13,850.

• The deductions in the W-4 Deductions Worksheet were updated.

• Head of Household: $20,800

• Married: $27,700

• Single: $13,850

• The ACA Safe Harbor Affordability Rate is 0.0912 (9.12%) for 2023.

To support the federal requirements, Costpoint adds updates to the following screens:

• Manage Federal Tax Tables

• Manage Federal Taxes

• Compute Payroll

Attention: For more information, refer to the following:

• Federal Income Tax Withholding: https://www.irs.gov/pub/irs-pdf/p15t.pdf

• W-4 Amounts: https://www.irs.gov/forms-pubs/about-form-w-4

• Safe Harbor Affordability Rate: https://www.irs.gov/pub/irs-drop/rp-22-34.pdf

Note: This update requires patch dbc_800_11039.

2023 SUTA Wage Base

This Costpoint release adds tax table records effective January 1, 2023 on the Manage State Taxes screen for states where the unemployment-taxable wage base has been updated for tax year 2023.

Alaska

The unemployment-taxable wage base increases from $45,200 to $47,100.

Arkansas

The unemployment-taxable wage base decreases from $10,000 to $7,000.

Hawaii

The unemployment-taxable wage base increases from $51,600 to $56,700.

Kentucky

The unemployment-taxable wage base increases from $10,800 to $11,100.

North Carolina

The unemployment-taxable wage base increases from $28,000 to $29,600.

North Dakota

The unemployment-taxable wage base is to rise from $38,400 to $40,800.

Oregon

The unemployment-taxable wage base is to rise from $47,700 to $50,900.

Rhode Island

The unemployment-taxable wage bases will be $29,700 for employers assigned the highest tax rate and $28,200 for all other employers.

Utah

The unemployment-taxable wage base increases from $41,600 to $44,800.

Virgin Islands

The unemployment-taxable wage base decreases from $30,800 to $30,200.

Note: These updates require the following patches:

• dbc_800_11031

• dbc_800_11034

• dbc_800_11039

• dbc_800_11041

Colorado 2023 Tax Table Updates

Colorado released 2023 versions of its withholding formula and optional withholding certificate.

The changes to the withholding formula included the lower tax rate and a clarification in the instructions that amounts of zero entered on Form DR 0004, Colorado Employee Withholding Certificate, must still be used in the formula. In the November elections, voters approved a proposition to reduce the state income tax rate to 4.4% from 4.55%.

The standard amounts used in the formula increases if an employee either does not submit Form DR 0004 or leaves Line 2 of the form blank:

• For employees with a federal filing status of married filing jointly or qualifying widow or widower, the standard amount increases from $8,000 to $9,000.

• For all other filing statuses, the standard amount rises from $4,000 to $4,500.

To support the state updates, this release adds records on the following screens:

• Manage State Standard Deductions

• Manage State Taxes

• Manage State Tax Tables

• Manage State Tax Withholding Adjustments

Attention: For more information: refer to the following:

• DR 0004: https://tax.colorado.gov/sites/tax/files/documents/DR%200004.pdf

• DR 1098 Colorado Withholding Worksheet for Employers: https://tax.colorado.gov/sites/tax/files/documents/DR%201098.pdf

Note: This update requires patch dbc_800_11031.

 

State Withholding (ESMSTATEWH)

The labels of existing options in the Colorado Annual Withholding Allowance group box were updated to the following:

• Use the federal standard deduction amount for my filing status ($9,000 if married filing jointly or qualifying widow(er), or $4,500 otherwise).

• Specify an annual withholding allowance amount based on the Standard Allowance table or Worksheet 1 from the DR 0004 Colorado Employee Withholding Certificate. (If you want a greater amount withheld, you may enter a smaller amount than either calculation, including zero.)

Note: This update is also reflected on the State Withholding tab of the Life Events/New Hires screen.

Illinois 2023 Tax Table Updates

Illinois released the 2023 withholding methods. The value of a state allowance increases from $2,425 to $2,625.

To support the state changes, Costpoint adds updated records to the following screens:

• Manage State Standard Deductions

• Manage State Tax Tables

• Manage State Tax Withholding Adjustments

• Manage State Taxes

Attention: For more information, refer to: https://tax.illinois.gov/content/dam/soi/en/web/tax/forms/withholding/documents/currentyear/2023-il-700-t-illinois-withholding-tax-tables.pdf.

Note: This update requires patch dbc_800_11045.

Indiana 2023 Tax Table Updates

Effective on or after January 1, 2023, the state income tax rate decreases from 3.23% to 3.15%.

To support the state changes, Costpoint adds updated records to the following screens:

• Manage State Standard Deductions

• Manage State Tax Tables

• Manage State Tax Withholding Adjustments

• Manage State Taxes

Attention: For more information, refer to the Departmental Notice #1 (R40/12-22): https://www.in.gov/dor/files/dn01.pdf.

Note: This update requires patch dbc_800_11031.

Maryland 2023 Tax Table Updates

Maryland released the 2023 withholding guide, which contains a withholding percentage method for one additional local tax rate compared to 2022.

• The minimum and maximum standard deduction increases to $1,700 and $2,550 annually, up from $1,600 and $2,400.

• A percentage method corresponding to a 2.75% local tax rate was added to the guide.

• Six Maryland counties made changes to their income tax rates for 2023, including two counties that introduced graduated rates.

To support the state changes, Costpoint adds updated records to the following screens:

• Manage State Standard Deductions

• Manage State Tax Tables

• Manage State Tax Withholding Adjustments

• Manage State Taxes

Attention: For more information, refer to:

• 2023 Withholding Guide: https://www.marylandtaxes.gov/forms/23_forms/Withholding_Guide.pdf

• 2023 Withholding Tax Facts: https://marylandtaxes.gov/forms/Tax_Publications/Tax_Facts/Withholding_Tax_Facts/Witholding_Tax_Facts_2023.pdf

Note: This update requires patches dbc_800_11031 and dbc_800_11041.

 

Allegany County

Allegany County decreased tax rates from 3.05% to 3.03%.

Note: There are no changes to Allegany County as it will still be using the 3.05% withholding tables.

 

Anne Arundel County

Anne Arundel County introduced graduated tax brackets. Anne Arundel County, which used a tax rate of 2.81% in 2022, now uses that rate for taxable income of more than $50,000 in 2023 and uses a 2.7% rate for taxable income of up to $50,000.

Note: Maryland’s 2023 withholding guide added a percentage method corresponding to a 2.75% local tax rate, which means that Anne Arundel County will use the combination of 2.75% and 2.85% tables.

 

Cecil County

Cecil County decreased tax rates from 3% to 2.8%.

Note: Cecil County will now use the 2.85% withholding tables.

 

Frederick County

Frederick County introduced graduated tax brackets. Frederick County used a tax rate of 2.96% in 2022. In 2023, a 2.75% rate applies when an employee earns up to $100,000 and has a filing status of married filing jointly, head of household, or qualifying widow/widower with dependent child, or when an employee earns up to $50,000 and has a filing status of single, married filing separately, or dependent. Otherwise, the rate of 2.96% applies.

Note: Maryland’s 2023 withholding guide added a percentage method corresponding to a 2.75% local tax rate, which means that Frederick County will use the combination of 2.75% and 3.00% tables.

 

St. Mary’s County

St. Mary’s County decreased tax rates from 3.1% to 3%.

Note: St. Mary's County will now use the 3.00% withholding tables.

 

Washington County

Washington County decreased tax rates from 3% to 2.95%.

Note: There are no changes to Washington County as it will still be using the 3.00% withholding tables.

 

Manage State Tax Withholding Adjustments (PRMSTAC)

The application now allows multiple rows for Supplemental Tax Rate type by enabling the For Annualized Wage Over/Wage Basis field.

Prior to this update, when you added a second row, you could specify a new rate in the Other Rate 1 field but you could not specify a different value in the For Annualized Wage Over/Wage Basis field since the field was disabled and set to zero.

Note: This update is applicable to all states.

 

Compute Payroll (PRPCPR)

For bonus payroll processing, the application now retrieves the appropriate Supplemental Tax Rate 1 value based on the value of the For Annualized Wage Over/Wage Basis field if the Type is Supplemental Tax Rate.

Note: This update is applicable to all states.

 

Manage Payroll Records (PRMPTF)

For bonus payroll processing, the application now retrieves the appropriate Supplemental Tax Rate 1 value based on the value of the For Annualized Wage Over/Wage Basis field if the Type is Supplemental Tax Rate.

Note: This update is applicable to all states.

Mississippi 2023 Tax Table Updates

Mississippi released the 2023 withholding formula, which now uses a flat 5% income tax rate. In 2022, the formula used two brackets of 4% and 5%.

To support the state changes, this release adds updated records on the following screens:

• Manage State Standard Deductions

• Manage State Tax Tables

• Manage State Tax Withholding Adjustments

• Manage State Taxes

Attention: For more information, refer to:

• Flowchart: https://www.dor.ms.gov/sites/default/files/Business/Computer%20Payroll%20Flowchart%20-%2011-02-22.pdf

• Employee’s Withholding Exemption Certificate: https://www.dor.ms.gov/sites/default/files/Business/89350218.pdf

Note: This update requires patch dbc_800_11041.

New Mexico 2023 Tax Table Updates

New Mexico released the 2023 withholding methods with the following updates.

• The percentage method‘s tax brackets were adjusted.

• The tax rates continue to range from 1.7% to 5.9%.

To support the state requirements, this release adds updated records on the following screens:

• Manage State Standard Deductions

• Manage State Tax Tables

• Manage State Tax Withholding Adjustments

• Manage State Taxes

Attention: For more information, refer to: https://www.tax.newmexico.gov/businesses/wp-content/uploads/sites/4/2021/03/FYI-104.pdf.

Note: This update requires patch dbc_800_11039.

North Carolina 2023 Tax Table Updates

North Carolina’s flat tax rate decreases for 2023. The tax rate for 2023 is 4.75%, down from 4.99%, which means the rate used for withholding is 4.85% in 2023 instead of 5.09%.

To support the state updates, this release adds updated records on the following screens:

• Manage State Standard Deductions

• Manage State Tax Tables

• Manage State Tax Withholding Adjustments

• Manage State Taxes

Attention: For more information, refer to: https://www.ncdor.gov/media/13802/open.

Note: This update requires patch dbc_800_11034.

North Dakota 2023 Tax Table Updates

North Dakota’s 2023 withholding methods were posted in their official website. The state provides two methods, one for pre-2020 Forms W-4 and one for Forms W-4 from 2020 or later, as it has each year since 2020.

• The value of an allowance for a pre-2020 Form W-4 was $4,300 annually, unchanged from 2022.

• The tax brackets in both formulas were adjusted, and the tax rates used continue to range from zero to 2.9%, with a supplemental tax rate of 1.84%.

To support the state requirements, this release adds updated records on the following screens:

• Manage State Standard Deductions

• Manage State Tax Tables

• Manage State Tax Withholding Adjustments

• Manage State Taxes

Attention: For more information, refer to: https://www.tax.nd.gov/sites/www/files/documents/forms/income-tax-withholding-rates-and-instructions-booklet-2023.pdf.

Note: This update requires patch dbc_800_11041.

Oregon 2023 Tax Table Updates

The Oregon Department of Revenue (DOR) issued guidance on withholding tax formulas, effective January 1, 2023.

• The federal tax adjustment amount increased from $7,250 to $7,800 for an employee with annual wages up to $50,000.

• The federal tax adjustment phase out amounts for an employee with annual wages $50,000 or greater has changed in 2023.

• The tax table has changed for an employee with annual wages up to $50,000.

• The tax table has changed for an employee with annual wages $50,000 or higher.

• The allowance amount increased from $219 to $236.

• The standard deduction amount increased from $2,420 to $2,605 for an employee filing “Single” with fewer than 3 allowances.

• The standard deduction amount increased from $4,840 to $5,210 for an employee filing “Single” with 3 or more allowances.

• The standard deduction amount increased from $4,840 to $5,210 for an employee filing “Married”.

To support the state requirements, this release adds updated records on the following screens:

• Manage State Standard Deductions

• Manage State Tax Tables

• Manage State Tax Withholding Adjustments

• Manage State Taxes

Attention: For more information, refer to: https://www.oregon.gov/dor/forms/FormsPubs/withholding-tax-formulas_206-436_2023.pdf.

Note: This update requires patch dbc_800_11041.

Rhode Island 2023 Tax Table Update

Rhode Island’s 2023 withholding methods were released by the state taxation division.

• Tax rates used in the withholding methods continue to range from 3.75% to 5.99%, and the brackets used in the percentage method were adjusted.

• The annual wage threshold above which the value of a state allowance is zero increased from $241,850 to $260,550.

To support the state requirements, Costpoint adds updated records to the following screens:

• Manage State Standard Deductions

• Manage State Tax Tables

• Manage State Tax Withholding Adjustments

• Manage State Taxes

Attention: For more information, refer to: https://tax.ri.gov/sites/g/files/xkgbur541/files/2022-12/2023%20Withholding%20Tax%20Booklet_12162022.pdf.

Note: This update requires patch dbc_800_11039.

Vermont 2023 Tax Table Updates

The Department of Taxes of Vermont released the 2023 withholding methods, which include the following updates:

• The value of a state allowance in the withholding methods increased from $4,500 to $4,850 annually.

• The tax brackets used in the percentage method were adjusted.

To support the state requirements, Costpoint adds updated records to the following screens:

• Manage State Standard Deductions

• Manage State Tax Tables

• Manage State Tax Withholding Adjustments

• Manage State Taxes

Attention: For more information, refer to https://tax.vermont.gov/sites/tax/files/documents/GB-1210-2023.pdf.

Note: This update requires patch dbc_800_11039.

Defect 1858772: When you ran the MR Installer, /z"filedynamicdownload=true" did not work when used as a command line parameter.

Defect 1848580: When you imported a purchase order (PO) in Import Purchase Orders, the unit of measure (U/M) was not autopopulated for Line Charge Types that had a default UOM.

Defect 1853126: When you attempted to change the Open period to the next period, the following error displayed: “The leave year cannot be edited because this leave period has already been computed to Manage Leave Edit Table or posted to Leave History.”

Defect 1842731: The employee’s taxable amount was set incorrectly if:

• The employee used a pay type that was marked as taxable but not subject to withholding.

• The employee had a local tax based on YTD and had already reached the annual limit.

Warning: Costpoint Payroll users must ensure that the Annual Ceiling Limit on the Manage Local Taxes screen is set correctly for all local taxes based on YTD. Otherwise, if the Annual Ceiling Limit is not set, the local taxable wages will be 0.00.

Defect 1852689: A system error (PRIMARY KEY constraint) displayed when you ran the Create W-2 Table process. This issue occurred if a record with a Pennsylvania Worksite PSD Code and a record without a Pennsylvania Worksite PSD Code both existed for the same employee with different check dates within a year in the Employee Earnings Local Taxes table.

Note: As an additional fix, an error message in the report file will not be displayed if the employee has no Pennsylvania Worksite PSD Code in the Employee Earnings Local Taxes table or Employee Local Taxes table when the Locality is set up for Box 14.

Defect 1852250: The Export Payroll Taxes file for the fourth quarter of the year displayed zero (0) for the local values. This issue occurred even though the Earnings and Local Withholding report displayed the correct values for the fourth quarter for all types (gross, tax, and others).

Defect 1813576: The backloaded labor history table was not in sync with the General Ledger. This caused the project to erroneously indicate that it needs updating.

Defect 1848132: BUDGET_REV displayed incorrect values because all budgeted revenues, regardless of project version and project ID, were updated during BUD and EAC calculations.

Defect 1841079: This application has been updated to print Form 1443 (Contractor's Request for Progress Payment) in the latest version. To see the current copy of the form, refer to https://www.gsa.gov/forms-library/contractors-request-progress-payment.

Defect 1857560: The Expense Report submit process performance has been improved.