United States Department of Agriculture

Office of the Chief Financial Officer

National Finance Center

P.O. Box 60000 New Orleans Louisiana 70160

The state of Nebraska passed legislation which requires employers to withhold state income tax for each employee at a rate of at least one and one half percent (1½%) of gross wages, less tax-qualified deductions, unless the employee is able to justify the lower withholding percentage. The Nebraska Department of Revenue (DOR) has defined 1½% of gross wages, less tax-qualified deductions as follows:

• A minimum withholding tax will be implemented for Single and Head of Household employees which is equal to one-half the amount that would be withheld for a Single filer claiming one exemption or
• A minimum withholding tax will be implemented for Married employees which is equal to one-half the amount that would be withheld for a Married filer claiming two exemptions.

Note: This law will affect employees who are exempt or who claim Single with 2 or more exemptions or Married with 3 or more exemptions.

Employees who can justify the lower withholding percentage must submit the Special Withholding Procedures form (Attachment 1) along with supporting documentation. A description of acceptable supporting documentation is included in Attachment 2. Note: Attachment 2 lists the state income tax withholding as 3% of gross wages; however, subsequent legislation has been passed to change that percentage to 1½%, as stated above.

Beginning with the processing of Pay Period 18, personnel offices can update the employee's state income tax withholding through a National Finance Center (NFC) entry system: Front-End System Interface (FESI), Entry, Processing, Inquiry, and Correction System (EPIC), or EmpowHR. The following are acceptable entry codes through FESI, EPIC, or EmpowHR:

• Y00 - employee provides proof of number of exemptions claimed to receive the lower withholding percentage
• N00 - employee no longer wants to provide number of exemptions claimed to receive the lower withholding percentage

The employee can update their state income tax withholding through the Self-Service Option of the Employee Personal Page (EPP).

Personnel offices should notify their employees to review their filing status, and if applicable, make the appropriate changes.

Beginning with wages paid for Pay Period 20, NFC will make the following changes to the state of Nebraska income tax withholdings:

• NFC will apply the new tax withholding based on LB223 and LB1004.
• The annual exemption amount for SINGLE and MARRIED filers will increase from $1,530 to $1,700.
• The Single, Head of Household, and Married withholding tables will change.

To view the updated tax formula, go to 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 504-255-4630.

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

Attachments