Changes to the Federal Tax Withholding Rate

In accordance with the Economic Growth and Tax Relief Reconciliation Act of 2001 (H.R. 1836), the flat withholding rate for Federal income taxes withheld on supplemental wages paid after August 6, 2001, will decrease from 28 percent to 27.5 percent.

TRVL is affected by this decrease in the withholding tax rate because certain relocation travel expenses are considered supplemental wages and are subject to tax withholding (taxable). TRVL computes and withholds Federal, state, and FICA/HIT taxes from those travel vouchers that include taxable expenses. Therefore, relocation vouchers paid after August 6, 2001, will be subject to the new Federal withholding rate of 27.5 percent.

The TRVL procedure, which is available online at the NFC Web site, has been updated to include the information in this bulletin. The Latest Update Information section at the beginning of the procedure provides a summary of the update. To view and/or print this procedure, go to the NFC home page (www.nfc.usda.gov) and click the Pubs & Forms icon. At the Pubs & Forms page left-hand menu, click List by System Acronym or List by Title/Chapter. Then search for TRVL on the list provided. If you are unable to print from the Web, you can request a printed copy by submitting Form AD-1083, Request for Action for Procedures/Reports, to the address or fax number printed on the form.

Please refer questions about TRVL to Travel and Transportation Section personnel at 504-255-4878. Refer questions about this bulletin to the Directives and Analysis Branch at 504-255-5322 or via e-mail at nfc.dab@usda.gov.

/s/

RONALD R. BERNHARD, Director
Financial Services Division