The Vermont Department of Taxes announced that it will not be updating the state income tax withholding tables for 2018 at this time. Employers are instructed to continue to use the 2017 withholding tables and instructions for calendar year 2018 until further notice. (VTax Connect for tax practitioners, attorneys and legal professionals, February 7, 2018.)

Posted to the Department's website and contained within the 2017 withholding booklet is the following statement:

"Please note: The Department will not be updating the Income Tax Withholding Tables, please continue to use the 2017 Income Tax Withholding Tables."

According to a tax department representative, there is a possibility that revised income tax withholding tables will be issued later this year (i.e., April 2018) if pending legislation is enacted to address the effects of the federal Tax Cuts and Jobs Act on Vermont state income tax law.

As we previously reported, the Department announced last year that it would delay the release of its 2018 income tax withholding tables until after the final passage of the federal Tax Cuts and Jobs Act (the tax reform bill). (VTax Connect for tax practitioners, attorneys and legal professionals, December 21, 2017.)

Supplemental wages

Vermont is the only state that uses a percentage of federal income tax withholding as an alternative to the regular withholding method for computing state income tax withholding on supplemental wages. For 2017, the supplemental income tax withholding rate was 24% of federal income tax withholding.

According to the Department representative, this rate will continue to apply for 2018 until and unless the Department issues further guidance. (Email response to inquiry, February 8, 2018.)

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