United States Department of Agriculture

Office of the Chief Financial Officer

National Finance Center

P.O. Box 60000 New Orleans Louisiana 70160

Arizona Form A-4, Employee's Arizona Withholding Percentage Election, (see attachment) has been changed to no longer calculate the state's withholding tax as a percentage of Federal tax. Beginning with wages paid for Pay Period 15, 2010, the National Finance Center (NFC) will begin calculating the withholding as a percentage of Arizona state taxable wages. If a previously submitted Form A-4 is on file, the old percentages (10.7, 20.3, 24.5, 26.7, 33.1, and 39.5) will automatically be converted to the new corresponding rates (1.3, 1.8, 2.7, 3.6, 4.2, and 5.1). When a Form A-4 has not been filed, or an invalid status is found for an employee on the database, the employee's taxes will automatically be withheld at a rate of 2.7 percent regardless of his/her annual income. Employees with an exempt status will remain the same.

Note: Due to these changes, the state of Arizona is instructing employing agencies to obtain a revised Form A-4 from all employees. Additionally, if the employee chooses to use another percentage rate, he/she must file a new A-4 indicating his/her selection.

When entering the Arizona state tax percentage, enter the percentage rate as shown below. Precede with a zero, but do not enter the decimal point.

To view the updated tax formula, go to the NFC's Home Page (www.nfc.usda.gov) and click the Publications link at the top of the page. At the Publications page right-hand menu, click Tax Formulas and select the appropriate state from the map provided. Changes to the tax formula are identified by " ."

For questions about NFC processing, contact the Payroll/Personnel Call Center at 1-800-981-3026 or the EmpowHR Help Desk at 1-888-367-6955.

/s/ Gary Millet for
JOHN S. WHITE, Acting Director
Government Employees Services Division

Attachments