| Update Applicable to: | Effective date |
| All covered employers | See details below |
What happened?
On May 13, 2024, the Iowa Department of Revenue (IDR) issued updated instructions for employee withholding for wages paid in calendar year 2024.
What are the details?
Previous guidance instructed employers with employees who do not file an updated W-4 using the 2024 IA W-4 to use $40 as the total allowance amount and $0 as the additional withholding amount when calculating these employees’ Iowa withholding amounts.
The IDR has updated its guidance to provide employers with two options to calculate the amount of Iowa employee withholding in situations where the employer has not received a 2024 IA W-4 from an employee:
- Employers awaiting updated 2024 IA W-4 forms can temporarily use $40 as the total allowance and $0 for additional withholding when calculating employee withholding amounts.
- For employees with a pre-2024 IA W-4, employers can use the most recent W-4 but must multiply the allowances on line 6 by $40. For example, 6 allowances on a 2023 W-4 equals $240 for 2024 withholding.
For the formula and an example.
Business Considerations
- Employers should inform employees to submit the updated 2024 IA W-4 form to ensure timely submission and accurate withholding.
- Employers should ensure their payroll systems are updated to manage the new withholding calculations and any temporary measures.
Source References
- IDR Releases Tax Guidance: Employee Income Withholding Instructions (Iowa Department of Revenue)
- Iowa Department of Revenue revises income tax withholding instructions (Ernst & Young LLP.)
Resources
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