Federal Tax Changes Effective January 2018

February 2, 2018

As a result of recent regulatory changes effective January 1, 2018, tax changes have been programmed into the Payroll system.  Updates for the types of changes are included below.

Federal Tax Withholding Changes:

  • Employees may see a change in their net pay.
  • Since the IRS was not able to release the tables early, retroactive changes were applied.  Employees may receive a refund of federal taxes from the previous period. This dollar amount will be displayed as DifprePe under the Gross Pay column of the pay statement.
  • The changes for the biweekly employees were included on their pay statements dated February 2, 2018.
  • Monthly employees will see these changes on their pay statements dated February 23, 2018.
  • The online pay statement email notifications have been updated to reflect this information so individual employees are aware as well.

Supplemental Federal Tax Rates:

  • The flat tax rate for supplemental payments has been reduced from 25% to 22% for all supplemental payments up to $1,000,000.
  • The flat tax rate for supplemental payment amounts in excess of $1,000,000 has been reduced from 39.6% to 37%.

Employee Social Security Tax Rates:

  • The OASDI employee portion of the Social Security tax remains unchanged at 6.2%. The annual OASDI taxable gross maximum has increased to $128,400 for calendar year 2018. As a reminder, this is reset on an annual basis.  OASDI taxes restart in January of each year. The annual OASDI tax limit has changed to $7,960.80.
  • The Medicare tax rate remains unchanged at 1.45%. An additional Medicare tax rate of 0.9% will apply to all wages in excess of $200,000. 

North Carolina State Tax Withholding:

  • North Carolina Tax withholding tables remain unchanged at 5.599%

Please share this information with employees in your department. If they have questions specific to their withholding requirements, they should contact their accountants for assistance with tax advice or visit the IRS website for additional information.

We appreciate your continued support. If you have any questions, please contact our Corporate Payroll Services team at payroll@duke.edu or 684-2642.