The North Carolina Department of Revenue has amended a regulation on personal income tax withholding for supplemental wage payments. The amendment provides that if the employer has withheld tax on regular wages and the supplemental amount is not paid in a single payment together with the regular wages, the supplemental wages may be treated as wholly separate from the regular wages. The employer must apply the income tax rate for the tax year, which is 5.75% for the 2016 tax year and 5.499% for tax years after 2016, plus one-tenth of 1% to the supplemental wage payment without consideration for allowances claimed on the employee’s withholding allowance certificate. Prior to the amendment, the rate of withholding for separately reported supplemental wages was 5.75%. (Administrative Rules, Sec. 17:06C.0117, North Carolina Department of Revenue, effective August 1, 2016.)
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