TAX NEWS - DECEMber 2009

United States Tax: Announcement regarding rates to be used effective January 1, 2010

The New York State Department of Taxation and Finance has recently announced revised income tax withholding rates with respect to supplemental wages paid on or after January 1, 2010. Effective January 1, 2010, employers paying supplemental wages to employees who are residents of, or work in, New York State must withhold New York State income tax at a rate of 9.77%.

Additionally, effective January 1, 2010, where supplemental wages are paid to Yonkers residents, employers must now withhold City of Yonkers (NY) income tax at a rate of .977% The withholding rates applicable to supplemental wages paid to New York City residents and Yonkers nonresidents will remain unchanged at 4.0% and .50%, respectively.


Action

- Employers should review their payroll systems to ensure that the new withholding rates have been implemented.
- Employers should consider communicating these changes, and their impact on compensation, to employees.