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Idaho Revises Withholding Tables, Supplemental Wage Tax Rate Due to Federal and State Tax Reform Laws

BY: APA Staff | 05/04/18

Effective retroactive for wages paid on or after January 1, 2018, the Idaho State Tax Commission (STC) has issued revised wage-bracket and percentage method withholding tables and information for employers. Although the new tables are effective from January 1, employers do not need to adjust employees’ withholding for the months before the new tables were published [Pub. EPB00006, A Guide to Idaho Income Tax Withholding, rev. 4-27-18].

The withholding tables were revised due to federal and state tax reform laws that were recently enacted. The federal Tax Cuts and Jobs Act (Pub. L. 115-97) was passed at the end of 2017 and took effect January 1, 2018. In response to the federal legislation, Idaho passed its own state tax reform legislation (H.B. 463, L. 2018). Idaho’s legislation lowered the top individual income tax rate to 6.925% from 7.4%. As a result, the supplemental wage tax rate is also reduced to 6.925% from 7.4%, effective retroactive to January 1, 2018.

Idaho now uses an Idaho allowance count on Line 5 of the Form W-4, Employee’s Withholding Allowance Certificate (an example is available on page 19 of the revised withholding guide). Idaho accepts the federal Form W-4 for state withholding purposes and does not have its own employee withholding allowance certificate. The Idaho withholding allowances are based on the number of children who qualify for the Idaho Child Tax Credit. The STC is recommending that all employees update their Forms W-4 for state withholding purposes.

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