North Carolina Employment Law Update – September 2016

North Carolina

NCDOR Amends Supplemental Wage Withholding Regulation

On September 1, 2016, the North Carolina Department of Revenue issued an amended regulation (17 NCAC 06C.0117) on personal income tax withholding for supplemental wage payments. The amended regulation provides that if the employer has withheld tax on regular wages and the supplemental amount is not paid in a single payment together with the regular wages, the supplemental wages may be treated as wholly separate from the regular wages. The employer must apply the income tax rate for the tax year, which is 5.75 percent for the 2016 tax year and 5.499 percent for tax years after 2016, plus one-tenth of 1 percent to the supplemental wage payment without consideration for allowances claimed on the employee’s withholding allowance certificate. Prior to the amendment, the rate of withholding for separately reported supplemental wages was 5.75 percent.

Read the Amended Regulation (p. 400)