News & Resources


State Use of IRS Form W-4

BY: Alice P. Jacobsohn, Esq. | 09/05/19

In a collaborative effort with the National Payroll Reporting Consortium (NPRC), APA has asked several states whether they will develop their own withholding certificates. The request was sent to Colorado, Delaware, Nebraska, New Mexico, North Dakota, South Carolina, and Utah. These are states that use allowances as the basis for payroll withholding calculations, rely on the current version of federal Form W-4, Employee’s Withholding Allowance Certificate, and do not have an equivalent state form.

The IRS is finalizing the 2020 Form W-4 and eliminating withholding allowances. These states will need to determine whether they will alter their tax laws to reflect the changes and continue to use the federal Form W-4 or develop their own form, instructions, and withholding tables to reflect different state withholding requirements.

Of critical importance for payroll professionals is ensuring that states provide sufficient time for payroll software developers to accommodate any related state changes and for payroll departments to learn about the state requirements.

The IRS is not requiring all employees to complete a 2020 Form W-4, so employers will be calculating federal income tax withholding based on a mix of past forms (with allowances) and new forms (without allowances). In addition, states may need to consider whether to support an additional withholding calculation and checkbox for optional higher withholding.

Interested in more state and local payroll coverage? APA’s PayState Update eNewsletter is perfect for you.

Alice P. Jacobsohn, Esq., is Senior Manager of Government Relations for the APA.