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July 20, 2020
2020-1849

Idaho revises withholding tax tables for 2020 and issues new state Form ID W-4

The Idaho State Tax Commission released inflation-adjusted 2020 state income tax withholding percentage method and wage-bracket tables to its website. Businesses are instructed to implement these revised tables as soon as possible. The Tax Commission instructs that employers should not adjust the withholding for the months prior to receiving the revised tables.

The Idaho personal income tax schedules are adjusted for inflation each year. The change is reflected in the income tax tables used to file income tax returns. The Tax Commission releases revised income tax withholding tables when the accumulated annual inflation adjustments cause a substantial change.

Form ID W-4 is revised

As we previously reported, in 2019 the Tax Commission released new Form ID W-4, Employee's Withholding Allowance Certificate. The Form ID W-4 has now been updated to include withholding instructions for US nonresident aliens. Employees are urged to complete both the state form and the federal Form W-4 to confirm correct income tax withholding. (EY Payroll Newsflashes Vol. 20, #011, 1-10-2019, and #089, 7-11-2019.)

Legislation enacted in 2018 (HB 463) eliminated state personal and dependent exemptions and eliminated or capped most itemized deductions. Starting with tax year 2018, the Idaho withholding allowances used in the percentage computation method are the number of children who qualify for the new Idaho Child Tax Credit. This number is reported on Form ID W-4. (EY Payroll Newsflash Vol. 19, #079, 5-2-2018.)

Supplemental wages

The supplemental withholding rate remains at 6.925%.

Supplemental wages are those wages paid to an employee in addition to the employee's regular wages, such as bonuses, commissions, overtime pay, payments for accumulated sick leave, severance pay, awards, prizes, back pay, retroactive pay and other similar payments. Employers may choose to compute withholding on supplemental wages by combining the supplemental payment with regular wages and treating them as a single payment or by multiplying the supplemental payment by the supplemental withholding rate.

For more information on Idaho withholding taxes, see the agency's website.

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Contact Information
For additional information concerning this Alert, please contact:
 
Workforce Tax Services - Employment Tax Advisory Services
   • Kenneth Hausser (kenneth.hausser@ey.com)
   • Debera Salam (debera.salam@ey.com)
   • Kristie Lowery (kristie.lowery@ey.com)
   • Peter Berard (peter.berard@ey.com)

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