New Withholding Changes

Recently enacted legislation makes significant changes to Section 12-700(a) of the General Statutes retroactive to Jan. 1, 2011. According to the Department of Revenue Services (DRS), employers and taxpayers need to perform catch-up withholding for the current year. The following is a brief overview of the changes that may affect your employees:

• The number of tax brackets has increased from three to six. The new brackets are: 3%, 5%, 5.5%, 6%, 6.5% and 6.7%.
• The 3% tax rate is phased out for taxpayers with Connecticut adjusted gross income:
  • Over $100,500 filing jointly
  • Over $56,500 filing single
  • Over $78,500 filing as head of household
  • Over $50,250 married filing separately
• The amount excluded from the 3% rate is taxed at the 5% rate.
• Additional tax provisions require a recapture of tax from taxpayers over certain income brackets. The recapture amounts are:
  • $150 per $10,000 of Connecticut adjusted gross income over $400,000 for taxpayers filing jointly, with a maximum total recapture of $4,500
  • $75 per $5,000 of Connecticut adjusted gross income over $200,000 for taxpayers filing single, with a maximum total recapture of $2,250
  • $120 per $8,000 of Connecticut adjusted gross income over $320,000 for taxpayers filing as head of household, with a maximum total recapture of $3,600
  • $75 per $5,000 of Connecticut adjusted gross income over $200,000 for married taxpayers filing separate, with a maximum total recapture of $2,250

These income tax changes are in effect for the entire tax year. Employers are required to adjust the withholding amount for employees affected by the new rates and additional provisions. The withholding tax tables have been revised to include the catch-up amount effective August 1, 2011. The withholding calculation rules have also been revised.

Download the revised withholding tax tables.

Calculate the additional withholding tax using the new withholding calculation rules.