High-income Minnesotans received a state tax hike earlier this year, but many hadn’t felt it in their paychecks – until now. That could create a problem.
On June 20, the state Department of Revenue reflected new legislation and added a top-end tax bracket of 9.85 percent to the withholding tax tables used by employers. That was an increase from the prior 7.85 percent.
Here’s the stickler. The new income tax rate actually applied to all 2013 pay, from Jan. 1 forward. So, some Minnesotans could come up short in state tax payments at year-end if they don’t try to catch up.
To offset the shortfall, the Department of Revenue suggests two options: Boosting withholding from paychecks further (use Form W-4MN) or making separate, estimated tax payments.
You’ll probably want to talk to your personal tax advisor to see if you’re affected and what you should do. In general, the 9.85 percent bracket applies to income above:
· $250,000 for married people who file a joint return, or for qualifying widows(ers),
· $125,000 for married people who file separate returns,
· $200,000 for heads of households, and
· $150,000 for single people.