Ask the Payroll Expert: The Tax Cuts and Jobs Act and State Taxes

ASK THE PAYROLL Expert

At Axcet HR Solutions, we’re happy to provide answers to some of your most popular payroll and payroll tax questions! As part of our “Ask the Payroll Expert” series, we’ve opened up our Q&A sessions to our social media followers. Be sure to check us out on Facebook. Previously, we covered the Tax Cuts and Jobs Act (TCJA) and its impact on federal withholding, including the IRS’ recommendation that everyone perform a “paycheck checkup”, how to use the IRS online withholding calculator and which group of people are more likely to be affected by the changes to the Internal Revenue Code. If you missed those Q&As, you can read them here and here. In this “Ask the Payroll Expert”, Axcet HR Solutions Director of Payroll Administration Jo McClure provides answers to how the Tax Cuts and Jobs Act may impact your state tax responsibility, which states have tax code changes for 2018 and what steps you can take to ensure proper withholding. Jo McClure has been with Axcet for more than 18 years and holds the designation of Certified Payroll Professional (CPP).

History of the Tax Cuts and Jobs Act

The TCJA increased take-home pay, which also resulted in the generation of more income for state taxation. While many states have already revised withholding tables and tax regulations, other state legislatures could wait until 2019 to amend their tax law and tables. Additionally, these states may also need to decide if they are going to adjust their tax policies for fringe benefits such as qualified moving expenses to align with the TCJA or whether they’ll pass separate legislation to keep existing laws intact.

How Does the Tax Cuts and Jobs Act Impact Taxpayers?

While the intent of TCJA is to simplify the tax code for most Americans and decrease income tax liabilities, the changes are significant enough to potentially disrupt your paycheck to the point where you may be deducting too much — or too little when it comes to your state taxes.

States with Tax Changes in 2018

The following states have made changes to their tax codes for 2018:
  • Missouri*
  • Colorado
  • Georgia
  • Idaho
  • Illinois
  • Kentucky
  • Louisiana
  • Maine
  • Michigan
  • New Mexico
  • New York
  • Oklahoma
  • Utah

*Click here to access the Missouri online withholding calculator.

What Do I Need to Do?

Axcet recommends performing a “paycheck checkup” on your state tax situation, in addition to your federal withholding. Contact your tax professional to ensure your withholding is accurate.  However, if you don't have a professional, your state may offer a withholding calculator. Check out your state(s) department of revenue website to see if a withholding calculator is available.

How Can Axcet Help?

Our Instant Axcet Employee Self Service has all the information our clients’ employees need to be prepared! 

1. Sign in at prisme.axcethr.com/phree/cmd/login. If you have not yet registered, click "Register" and fill in the required information. 

2. Under the Payroll menu, select Payroll Inquiry. This information will give you your year-to-date figures, including taxes already withheld. This is useful information for your tax professional as well as for state withholding calculators.
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3. Adjust your tax withholdings under My Tax Settings. Simply select your marital status, change your exemptions or additional withholding, and hit Save. These changes are immediate and will affect your following check.

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For more information check out How the Tax Cuts and Jobs Act Affects Businesses. 

We're always here to help! For questions regarding your Instant Axcet Employee Self Service, feel free to call your Axcet HR Solutions Payroll Administrator.  

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Written by Jo McClure