Tax overhaul changes withholding
Some county residents have already noticed more take-home pay because their employer has put the new federal withholding rates into effect.
Terms of a federal tax overhaul signed in late December technically go into effect Feb. 15, but some employers are already using the new withholding rates on employee paychecks.
Marion-Florence schools business manager Jordan Metro, Marion city clerk Tiffany Jeffrey, and Max Heinrichs, superintendent of Hillsboro schools, gave examples of how employee checks are being affected.
Metro provided examples of two district employees’ pay under both the old and the new federal income tax rates.
An employee with a monthly federal gross income of $3,257.03 paid $202.71 in federal income tax in 2017. Their 2018 federal income tax deduction is $161.59, Metro said. The savings amounts to $41.12 per paycheck.
A school district employee with a monthly income of $4,653.26 was paying $760.29 per paycheck in federal income tax last year. Now they are paying $617.51 per paycheck, for a savings of $142.78.
Jeffrey said a department head with a base pay of $1,568 per pay period had $188.72 withheld for federal income tax under the old tax rates and $151.51 withheld under the new rate.
A full time city employee making $755 per pay period used to have $32.31 withheld under the old tax rate and now has $26.39 withheld for federal income tax.
Heinrichs said an employee making $34,489 per year will save $589.20 per year under new tax rates, and an employee making $46,603 per year will save $969.48 this year.
Peabody-Burns schools have yet see the difference in employee pay, district clerk Lisa Hodges said.
“There are a lot of things that will affect how much is withheld,” Metro said. “The main one being what the person selected on their W4 withholding forms — selecting single deduction will cause you to have more withheld vs married deduction. You also have to take into consideration the number of allowances each person has selected on that form as well.”
Metro said pre-tax deductions, such as medical savings accounts and health insurance, also factor into the withholding equation.
Last modified Feb. 7, 2018