|
January 7, 2003 |
of bulletin 03ga2.04 |
2003 FEDERAL INCOME TAX WITHHOLDING
FORMULA, other rates and limits
1.
REASON FOR ISSUE: This bulletin transmits the 2003 Federal income tax
withholding formula, military deposit and back pay interest rates, FICA wage
base, TSP annual contribution limit and the Federal income tax withholding rate
for supplemental payments.
2.
FEDERAL INCOME TAX: The 2003 Federal Income Tax withholding formula affects the
computation of federal income tax deductions for salary paid on or after
January 1, 2003.
2003
FEDERAL INCOME TAX WITHHOLDING FORMULA
a. Calculate the annualized gross wages by
multiplying the biweekly gross wages by 26 pay periods.
b. If the employee participates in the Thrift
Savings Plan (TSP) or Federal Employees Health Benefits – Premium Conversion
(FEHB-PC) program, multiply the TSP and FEHB deductions by 26 and subtract this
result from the annualized gross wages to determine the adjusted annualized
gross wages.
c. Multiply the number of exemptions claimed by
$3,050.00 and subtract this result from adjusted annualized gross wages to
determine taxable wages.
d. If the employee is single or head of
household, apply the rates below to taxable wages to determine the annual tax
amount:
TAXABLE
WAGES
|
OVER |
NOT OVER |
AMOUNT OF TAX |
|
$
0 |
$
2,650.00 |
$
0.00 plus 0.0% over $0.00 |
|
2,650.00 |
8,550.00 |
0.00 plus 10.0% over 2,650.00 |
|
8,550.00 |
30,100.00 |
590.00 plus 15.0% over 8,550.00 |
|
30,100.00 |
65,920.00 |
3,822.50 plus 27.0% over 30,100.00 |
|
65,920.00 |
145,200.00 |
13,493.90 plus 30% over 65,920.00 |
|
145,200.00 |
313,650.00 |
37,277.90 plus 35% over 145,200.00 |
|
313,650.00 |
AND OVER |
96,235.40 plus 38.6% over 313, 650.00 |
e. If the employee is married, apply the
rates below to taxable wages to determine the annual tax amount:
TAXABLE WAGES
|
OVER |
NOT OVER |
AMOUNT
OF TAX |
|
$
0 |
$
6,450.00 |
$0.00 plus 0.0% over $0.00 |
|
6,450.00 |
18,450.00 |
0.00 plus 10.0% over 6,450.00 |
|
18,450.00 |
52,350.00 |
1,200.00 plus 15.0% over
18,450.00 |
|
52,350.00 |
111,800.00 |
6,285.00 plus 27% over 52,350.00 |
|
111,800.00 |
179,600.00 |
22,336.50 plus 30% over 111,800.00 |
|
179,600.00 |
316,850.00 |
42,676.50 plus 35% over 179,600.00 |
|
316,850.00 |
AND OVER |
90,714.00 plus 38.6% over 316,850.00 |
f.
Divide the annual tax amount calculated in steps 2d or 2e by 26 to determine
the biweekly withholding amount.
3. FEDERAL WITHHOLDING FOR SUPPLEMENTAL
PAYMENTS: For tax
year 2003, the Federal
income tax withholding for supplemental payments will remain at 27%. This rate applies to such payments as
awards, voluntary separation incentive payments and, when requested, lump sum
leave payments.
4. MILITARY SERVICE DEPOSIT RATES: The following are
calendar year interest rates to be used for computing military service
deposits: (To determine the composite
rate for a particular interest accrual date, refer to MP-6, Part V, Supp. 2.3,
Section 5.12 c(2)(b)(3)).
|
2003 |
5.000% |
|
2002 |
5.500% |
|
2001 |
6.375% |
|
2000 |
5.875% |
|
1999 |
5.750% |
|
1998 |
6.750% |
|
1997 |
6.875% |
|
1996 |
6.875% |
|
1995 |
7.000% |
5. BACKPAY INTEREST RATES: The following rates should be used to update the
OPM-provided Back Pay Award interest computation program:
|
January 1, 2003 |
5% |
|
October 1, 2002 |
6% |
|
July 1, 2002 |
6% |
|
April 1, 2002 |
6% |
|
January 1, 2002 |
6% |
|
October 1, 2001 |
7% |
|
July 1, 2001 |
7% |
|
April 1, 2001 |
8% |
|
January 1, 2001 |
9% |
6. FICA WAGE BASE: The FICA wage base
increases from $84,900 to $87,000 effective January 1, 2003. The rate for FICA, 6.20%, remains the
same. The wage base for Medicare is
still unlimited and the rate for Medicare remains at 1.45%.
7. THRIFT SAVINGS PLAN (TSP) LIMIT: For 2003, the maximum
annual deferral amount for TSP increases from $11,000 to $12,000. (Information on the catch-up provision for
employees 50 and over will be issued as soon as it is available from the Thrift
Investment Board.)
8. RESCISSONS:
This bulletin rescinds OF Bulletins 02GA2.02
9. QUESTIONS:
Questions
concerning this bulletin should be directed to the appropriate office below:
|
VHA Odd Number VISN |
VHA Payroll Helpline
I (Outlook e-mail) |
|
VHA Even Number VISN |
VHA Payroll Helpline
II (Outlook e-mail) |
|
VBA |
(202) 273-7309 |
|
All Others |
(202) 273-6038 |
//S// THURSTAN L. HUNTER FOR
MONICA CONGLETON
Director, Accounting and Payroll Service (047GA)