Recently enacted HB 1030 (Chapter 2016-94) increases the individual income tax standard deduction amounts for 2016 and 2017. However, the bill specifies that the North Carolina Department of Revenue is not required to adjust the withholding tables for calendar year 2016.

Effective for taxable years beginning on or after January 1, 2016, the standard deduction amounts for married filing joint and surviving spouse are increased to $16,500 (up from $15,500); for head of household to $13,200 (up from $12,400); and for single and married filing separate to $8,250 (up from $7,750).

Effective for taxable years beginning on or after January 1, 2017, the standard deduction amounts for married filing joint and surviving spouse is increased to $17,500; for head of household to $14,000; and for single and married filing separate to $8,750.

A Department official confirmed that the Department does not at this time plan to adjust the 2016 withholding tables. For now, continue to use the Publication NC-30, 2016 Income Tax Withholding Tables and Instructions for Employers, as updated in December 2015 for calendar year 2016. (Telephone conversation, July 28, 2016.)

Ernst & Young LLP insights

Employers may want to let their employees of know of the change, in case they wish to make adjustments in their South Carolina income tax withholding. (See our special report for more details on the federal and state Form W-4 rules.)s

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