TAXES 16-14, North Carolina State Income Tax Withholding

Published: March 18, 2016
Effective: Pay Period 06, 2016

Summary

The income tax withholding formula for the State of North Carolina will include the following changes:

No action on the part of the employee or the personnel office is necessary.

Tax Formula

State Abbreviation:

NC

State Tax Withholding State Code:

37

Acceptable Exemption Form:

NC-4

Basis for Withholding:

State Exemptions

Acceptable Exemption Data:

S, M, H/Number of Allowances

TSP Deferred:

Yes

Special Coding:

None

Additional Information:

North Carolina has implemented a new withholding exemption claim form. The State of North Carolina has indicated that all employees must file a new Form NC-4 EZ or NC-4 for tax year 2016.

Withholding Formula (Effective Pay Period 06, 2016)

  1. Subtract the nontaxable biweekly Thrift Savings Plan contribution from the gross biweekly wages.
  2. Subtract the nontaxable biweekly Federal Health Benefits Plan payment(s) (includes dental and vision insurance program and Flexible Spending Account - health care and dependent care deductions) from the amount computed in step 1.
  3. Add the taxable biweekly fringe benefits (i.e., taxable life insurance) to the amount computed in step 2 to obtain the adjusted gross biweekly wages.
  4. Multiply the gross biweekly wages by 26 to obtain the gross annual wages.
  5. Determine the standard deduction allowance by applying the following guideline and subtract this amount from the annual wages:

    If the Employee Is:

    The Standard Deduction Is:

    Nonresident Alien, Regardless of Marital Status

    $0

    Single

    $7,750

    Married or Qualifying Widow(er)

    $7,750

    Head of Household

    $12,400

  6. Determine the allowances by applying the following guideline and subtract this amount from the annual wages:

    Allowance = $2,500

  7. Multiply the annualized taxable wages calculated in the previous step by 5.85 percent to determine the annual tax amount.
  8. Divide the annual North Carolina income tax withholding by 26 and round to the nearest dollar to obtain the biweekly North Carolina income tax withholding.
  9. If the employee is a nonresident alien (NRA), and is claiming additional withholding, subtract the applicable amount shown in the table below from the additional withholding (but not less than zero).

    Pay Frequency

    Additional Withholding

    Weekly

    $9

    Biweekly

    $17

    Semimonthly

    $19

    Monthly

    $38

    Any other pay frequency

    $453.38 / # annual pay periods, rounded up to the next whole dollar

  10. Add the additional amount (reduced by NRA additional amount from previous step) or percentage elected by the employee to the pay period tax calculated in the above step and round to the nearest dollar to determine the amount of tax to be withheld for this pay period.

Additional Resources

To view the updated tax formula, go to the HR and Payroll Clients page from the MyNFC drop-down menu on the NFC homepage. Click the Publications tab in the center ribbon. Select U.S. Income Tax Formulas from the Publication menu to launch the tax map. Click the desired State from the map provided for the formula.

Inquiries

For questions about NFC processing, authorized Servicing Personnel Office representatives should contact the NFC Contact Center at 1-855-NFC-4GOV (1-855-632-4468) or via the Internet using the Requester Console.