The North Dakota State Tax Department released the 2018 Income Tax Withholding, Rates and Instructions for Wages Paid in 2018, including the percentage method for North Dakota state income tax withholding for use with wages paid on or after January 1, 2018 (see the Attachment for the annual table).

The 2018 wage-bracket withholding tables are also available on the North Dakota State Tax Department website.

The supplemental rate of withholding remains at 1.84% for calendar year 2018.

Release of the 2018 income tax withholding tables was delayed

As we reported previously, the Department delayed the issuance of the 2018 income tax withholding tables due to the passage of the federal Tax Cuts and Jobs Act (the tax reform bill). Because the changes in the 2018 wage-bracket and percentage method withholding tables are minor compared to the 2017 tables, the Department instructs employers to update their payroll systems going forward from now, and to not retroactively adjust withholding on wages paid prior to implementation of this 2018 update.

Supplemental wages

The supplemental rate of income tax withholding for 2018 remains at 1.84% (.0184).

Supplemental wages, as defined for federal income tax purposes, are treated as supplemental wages for North Dakota income tax purposes. This includes bonuses, commissions, overtime pay, payments for accumulated sick leave, severance pay, awards, prizes, back pay, and any other payment that is considered a supplemental wage for federal income tax withholding purposes. The method for calculating the amount of North Dakota income tax to withhold from supplemental wages is similar to the federal income tax withholding method. The amount of North Dakota income tax to withhold from supplemental wages depends on whether the supplemental wages are identified as a separate payment from regular wages.

If supplemental wages are combined and paid with regular wages, and the amounts of each are not separately identified, calculate the amount of North Dakota income tax to withhold from the combined amount using any of the regular methods allowed — i.e., the percentage method.

If supplemental wages are paid separately from regular wages (or are combined and paid with regular wages but each are separately identified), calculate the amount of North Dakota income tax to withhold using the applicable method below:

(a) For 2018, multiply the supplemental wages by 1.84% (.0184), or

(b) Add the supplemental wages to the regular wages for the most recent payroll period. Then calculate a withholding amount on this total amount using any of the regular methods allowed (e.g., the percentage method). From this withholding amount, subtract the amount of North Dakota income tax already withheld (from the regular wages). The result is the amount to withhold from the supplemental wages.

For a copy of the 2018 withholding tax guide or more information, contact the North Dakota State Tax Department at +1 701 328 1248, by e-mail at withhold@nd.gov or see the Department's website at www.nd.gov/tax.

For more information, see the Department's website. See also the Department's publication, Guideline — Income Tax Withholding.

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