Local Tax Codes

Use this option to create, review, and edit Local Tax tables for use during payroll processing. The table is based on employee filing statuses and pay frequencies. You can set up and change exemptions, allowances, and tax rates, which can include either a flat percentage or graduated rates.

You must set up a table for each municipality you anticipate needing for the Current Locality field when adding or changing employee local tax information. Contact your local Earned Income Tax offices for information concerning the applicable tax rates and regulations.

As local rates change, use Future Changes, Local Tax Codes to change your Local Tax records accordingly. This option allows you to change table records without affecting live data before the effective date you define. For more information, refer to Future Tax Table Options.

The Local Tax Codes report default file name is localtax.rpt.

If your account structure needs to be changed in accordance with the Every Student Succeeds Act (ESSA), refer to the PowerSchool ERP Human Resources and Payroll Every Student Succeeds Act Fiscal Year-End Checklist for details on updating Deduction, Pay Code, and Tax tables with new year information.

Menu Path

From the Human Resources menu, select Reference Tables. From the Payroll menu, select Local Tax Codes.

Action Bar

The Action Bar on the Local Tax Codes page displays the following items when you are adding or changing a table record:

Tax Detail	Displays the Local Tax Data section to define the information used in calculating local tax withholdings. Use this section to enter earnings ranges and their associated tax amounts or percentages. For information on the fields, refer to the Local Tax Data section on this page.
Credits	Displays the Local Tax Credits page to enter the amount to deduct from employee local taxes based on the number of dependents claimed. For an explanation of how the credits are entered, refer to the Credits field's description in the Local Tax Credits Page section.

Fields

Local Tax Data - List Page

Use this section to identify the Local Tax table record and enter exemption and allowance amounts that apply. Location Code, Pay Frequency, and Filing Status cannot be edited after a record is saved.

Field	Description
Location Code	Code identifying the locality of the table you are entering. The limit is two characters.
Description	Title or description of the tax record. You may include the name of the locality and, if desired, other information to identify the record, for example, Pennsville ‑ Married. The limit is 25 characters.
Pay Frequency	Determines how often the tax should be withheld. These codes should correspond with those entered in employee Payroll pages and combine with the location code and filing status to identify the tax table to use. You must create a separate table for each combination of code, frequency, and status. Select: A - Annual B - Bi-weekly M - Monthly S - Semi‑monthly W - Weekly X - X User‑defined Y - Y User-defined Z - Z User-defined The codes X, Y, and Z can be used to represent pay frequencies not addressed by the other selections.
Filing Status	Tax filing status that applies to the tax record rates. Unless the locality uses other status designations, we recommend that you enter M (for Married), S (for Single), or W (Married Filing Single). If other factors apply, you can define your own codes and enter the record deductions, earnings, and other data accordingly. This field coordinates with information in the Employee Information Taxes page to determine the local tax table to use during payroll processing. The tax status combines with the locality code and pay frequency to identify the correct local tax record. The limit is one character.
Liability Account	The liability account used for local tax withholding in the Fund Accounting system.
Standard Deduction Rate	Percentage for calculating the deduction all employees can take from their gross wages (Standard Deduction = Standard Rate x Earnings). Enter the percentage in decimal format (1.75% = 0.0175). This rate is used in conjunction with the Standard Minimum and Standard Maximum fields, which determine whether the calculated deduction applies or if the minimum or maximum amount should be applied instead. If the local tax does not allow for a deduction rate, you may leave the three standard fields at their zero defaults. The limit is one digit before the decimal and five digits after the decimal, and the value cannot exceed 1.00 (100%).
Local Tax Type	Define a local income tax type. This information is currently used in the Indiana W2 electronic file. Select: C - City Income Tax D - County Income Tax E - School District Income Tax F - Other Income Tax
Standard Minimum	Least amount in dollars and cents that can be deducted from employee gross wages, regardless of the amount calculated with the standard deduction rate. If a minimum does not pertain, you may accept the zero default. Example: If an employee earns $20,000 and the standard deduction rate is 12%, the deduction from the taxable wages would be $2,400, in which case the taxable wages would be $17,600 (20,000 ‑ 2,400). However, if the standard minimum is $3,000, the taxable wages would be $17,000 (20000 ‑ 3000), since the standard minimum has priority over the calculated value. The value cannot exceed 8 digits before the decimal, including rounding.
Standard Maximum	Largest deduction in dollars and cents that can be taken from employee gross wages, regardless of the amount calculated by the standard rate. If the local tax does not allow for a standard maximum, leave the field as its zero default. Example: If an employee earns $45,000 and the standard deduction rate is 10%, the deduction calculated would be $4,500. In this case, the taxable wages would be $40,500 (45,000 ‑ 4,500). However, if the maximum deduction is $4,000, the taxable earnings would be $41,000 (45000 ‑ 4000), since the maximum has priority over the calculated value. The value cannot exceed 8 digits before the decimal, including rounding.
Tax Status Exemption	Gross wages exempt from local tax, per pay period, based on the entry in the Tax Filing Status field, which usually refers to the employee marital status. If the local tax guidelines list an annual amount, prorate your entry by the number of pays issued annually (Exemption Per Pay = Annual Exemption ÷ Number of Pays). If the tax does not allow for this type of exemption, leave the field at its zero default. The value cannot exceed 8 digits before the decimal, including rounding.
Dependent Allowance	Gross wages in dollars and cents exempt per pay run for each eligible dependent. Enter the allowance in accordance with the pay frequency. For example, if the local tax guidelines list an annual allowance, prorate the entry using the equation: Per Pay Allowance = Annual Allowance ÷ Number of Pays. During payroll processing, the system multiplies the amount you enter by the value in the Dependents field in the Local section of the Employee Information Taxes page (Total Dependent Allowance = Dependent Allowance x Number of Dependents). This amount is then subtracted from the gross wages to determine the taxable earnings. Leave the field at its zero default if a credit applies for each dependent, rather than a pretax allowance, or if the local tax laws do not permit a dependent allowance. Example 1: If a weekly or biweekly tax table has a dependent allowance of $20 and an employee Taxes page lists three dependents, $60 (20 x 3) in gross wages would be exempt from the tax each pay run. Example 2: If the local tax guidelines list an annual dependent allowance of $600, enter 11.53 ($600 ÷ 52 = $11.53) for a table with a weekly pay frequency or 23.07 ($600 ÷ 26 = $23.07) with a biweekly frequency. The value cannot exceed 8 digits before the decimal, including rounding.
Supplemental Tax Percent	Percentage to apply against employee supplemental wages to determine the additional tax due. A supplemental wage is compensation paid in addition to regular wages, such as a bonus or severance pay. Enter the percentage in decimal format (1.75% = 0.0175). During payroll setup, you can designate a supplemental pay by entering a P (for percentage) in the Tax field on an employee timecard in the row associated with the supplemental pay code. This overrides the rate default pay frequency. The system then calculates the supplemental tax and adds it to the regular tax determined by the appropriate table (Total Tax Withheld = Regular + Supplemental). Leaving the zero default in this field results in no local tax being withheld on supplemental earnings. For the specific rates that apply to supplemental wages, refer to your local tax guidelines. The limit is one digit before the decimal and six digits after the decimal and the value cannot exceed 1.000000 (100%).

Local Tax Table - Tax Detail

As you add or edit a local tax record, click Tax Detail on the action bar to display Local Tax Table details. Define information to calculate local tax withholdings based on earnings ranges.

Each row in the page displays tax deduction figures that apply to employees whose wages are less than or equal to the amount in the Earnings field but are greater than the Earnings field value in the previous row.

Field	Description
Location Code	The locality for the record associated with the tax detail. Display-only.
Description	The locality description for the record associated with the tax detail. Display-only.
Pay Frequency	The pay frequency for the record associated with the tax detail. Display-only.
Filing Status	The tax filing status for the record associated with the tax detail. Display-only.
Earnings	Earnings in dollars and cents subject to the tax rate listed on the same line. For example, if employee taxable earnings are $32,500 and the table lists $32,000 on one line and $33,000 on the next, the system uses the rate from the line with $33,000 during payroll processing. If the locality uses a flat percentage, as opposed to graduated rates, enter 99,999,999.99 in the first Earnings field, and then enter the flat rate in the Tax Percent column. No other entries are required in this section if a flat rate is used. The value cannot exceed 8 digits before the decimal, including rounding.
Tax Amount	Amount in dollars and cents of the tax due based on the earnings on the same line. This rate applies when employee taxable wages reach the earnings listed on the line. If only a tax percentage applies instead of an amount, leave each field in this column at its zero default. If an amount and a percentage apply, enter both. With a percentage rate, the system calculates the tax as follows: Local Tax Due = Earnings x Rate. The value cannot exceed 8 digits before the decimal, including rounding.
Tax Percent	Percentage to use in calculating taxes during a pay run. Enter the percentage in decimal format (1.75% = 0.0175). This rate applies when employee taxable wages reach the earnings listed on a line. If only a tax amount applies instead of a percentage, leave each field in this column at its zero default. If an amount and a percentage apply, enter both. With a percentage rate, the system calculates the tax as follows: Local Tax Due = Earnings x Rate. The limit is one digit before the decimal and six digits after the decimal and the value cannot exceed 1.000000 (100%).

Local Tax Credits

As you add or edit a local tax record, click Credits on the action bar to display the Local Tax Credits page. Enter the amount to deduct from the employee local tax amount due based on the number of dependents claimed.

Field	Description
Location Code	The locality for the record associated with the tax credit. Display-only.
Description	The locality description for the record associated with the tax credit. Display-only.
Pay Frequency	The pay frequency for the record associated with the tax credit. Display-only.
Filing Status	The tax filing status for the record associated with the tax credit. Display-only.
Credits	Amount in dollars and cents to deduct from the tax amount due, based on the number of dependents recorded in the Employee Information Taxes page Local section. During a pay run, the system calculates the local tax, and then uses the number of dependents to look up the credit that should be subtracted based on the order of entries in the Local Tax Credits page (Tax Withheld = Gross Tax - Tax Credit). The entry should equal the total credit for the number of dependents claimed. Therefore, the top row is for one dependent, the second row for two dependents, and so on. If local tax guidelines call for an annual credit, prorate the credit to correspond with the pay frequency. If credits are not allowed, leave the fields at their zero defaults. Example 1: If you have a biweekly table and the local tax allows $5 per week for the first dependent and $4 for each additional dependent, enter 10 ($5 x 2 weeks) in the first line, 18 ((5 x 2) + (4 x 2)) in the second, 22 ((5 x 2) + (4 x 3)) in the third, and so forth. Example 2: If an annual credit of $250 per dependent is allowed, you should pro-rate the credit by dividing it by the number of pays issued annually (Credit Per Pay = Credit ÷ Number of Pays). For a monthly pay, enter 20.83 (250 ÷ 12) in the first line for one dependent, 41.67 (20.833 x 2) in the second line for two dependents, and so forth. The value cannot exceed 8 digits before the decimal, including rounding.