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Key Features
Release version 8.5.0 features calculation and rate changes to reflect current tax law.
The effective dates disclosed below indicate when the changes enter into force.
Product Enhancement
France 2018 Tax Free Year
Added the Calculate 2018 Transition Credit? tax position providing the option to offset 2018 income tax and employee social security costs, resulting in no French tax costs.
French employees are eligible for a credit equal to their 2018 taxes, Crédit d’Impôt de Modernisation du Recouvrement, to alleviate the need to pay both their 2018 liability (via tax return) and their 2019 withholding liability in the same year, as the country transitions to a withholding tax system, effective January 1, 2019.
This new tax position offers three options: Yes, No and Actual Only:
Yes calculates the credit on actual and hypothetical income tax and employee social security; resulting in no French tax costs for 2018.
No excludes this credit; thus continuing to calculate 2018 French tax costs.
Actual Only, available only for the home tax estimator, calculates the credit for actual income tax and employee social security; preserving the hypothetical tax deduction to support equalized tax policy, as needed.
For cost estimates, this tax position applies if the Year column label is 2018. The default value for the Cost Estimate Tax Position Set is Yes. Change the default value using the Tax Position Set feature.
This tax position applies for all compensation calculations created in 2018. The default value for the Compensation Calculation Tax Position Set is No, replicating the prior behavior. Use the Tax Position Set feature to change the default value.
Social Security Agreements
The following social security agreements were added:
Agreement countries
|
Effective date
|
Coverage period
|
Brazil – United States
Poland – Quebec (Canada)
|
Oct 1, 2018
Sep 1, 2018
|
60 Months
60 Months
|
Country Updates
Austria
Completed annual review with no material changes.
Belgium
Income Tax: Made the following changes, effective January 1, 2018:
Removed the 30% bracket with upper threshold of EUR 12,990. Income up to this threshold is now taxed at 25%. Additionally, increased the upper threshold for the 40% bracket by EUR 650 to EUR 22,290.
Updated the standard business deduction calculation to be 30% of taxable income up to EUR 4,720.
Increased the maximum income amount allocable to non-working spouses by EUR 430 to EUR 10,720.
Decreased the income threshold for personal exemptions by EUR 300 to EUR 45,750. Eligible exemptions above and below this threshold are EUR 7,430 and EUR 7,730, respectively.
Removed the pension credit cap of EUR 940. Thirty percent of employee pension contributions will be calculated as a credit reducing national and municipal tax.
Social Security: Made the following changes:
Decreased the employer contribution by 7% to 27%.
Added a tax free travel allowance for researchers and specialists capped at EUR 29,750.
Canada
Manitoba
Income Tax: Increased the following, effective January 1, 2018:
Tax bracket thresholds. The threshold for the top rate of 17.4% increased by CAD 1,821 to CAD 68,821.
Personal amount by CAD 248 to CAD 9,382.
China
Income Tax: Increased the following monthly amounts, effective October 1, 2018:
Thresholds for the 3%, 10%, and 20% brackets. The upper threshold for the 20% bracket increased by CNY 16,000 to CNY 25,000.
The standard deduction increased by CNY 1,500 to CNY 5,000 for Chinese Nationals.
Social Security: Increased the annual wage ceilings by location, effective July 1, 2018:
Beijing by CNY 27,396 to CNY 304,812.
Guangzhou by CNY 28,548 to CNY 295,848.
Shanghai by CNY 22,608 to CNY 256,752.
Shenzhen by CNY 31,248 to CNY 300,528.
Czech Republic
Completed annual review with no material changes.
Denmark
Completed annual review with no material changes.
Egypt
Income Tax: Increased the lowest bracket threshold. The threshold for the top rate of 22.5% remains EGP 200,000.
Finland
Completed annual review with no material changes.
France
Income Tax: Added the following credits:
Low income (La Décote). This credit is available when income tax is less than EUR 1,177 and EUR 1,939 for single and married taxpayers, respectively.
Household (Réfaction). This credit of up to 20% of tax is available when income is less than EUR 20,705 for single taxpayers. The threshold increases by number of dependents.
Germany
Income Tax: Increased the pension deduction rate by 2% to 86% and decreased the threshold by EUR 2,767 to EUR 20,000, effective January 1, 2018.
Ghana
Income Tax: Made the following changes, effective August 1, 2018:
Added a top bracket of 35% which applies to income over GHS 120,000.
Increased the nonresident tax rate by 5% to 25%.
Greece
Completed annual review with no material changes.
Hungary
Completed annual review with no material changes.
Italy
Completed annual review with no material changes.
Luxembourg
Completed annual review with no material changes.
Netherlands
Income Tax & Social Security: Changed the following, effective January 1, 2018:
Increased the General Levy Rebate phaseout threshold by EUR 1,439 to EUR 68,507.
Employment Levy Rebate brackets and rates. The phaseout threshold increased by EUR 1,390 to EUR 123,362. Below this threshold, a maximum of EUR 3,249 is available to reduce income tax and social security.
Norway
Completed annual review with no material changes.
Poland
Completed annual review with no material changes.
Portugal
Completed annual review with no material changes.
Sweden
Income Tax: Changed the following, effective January 1, 2018, unless indicated otherwise:
Employment income credit to calculate using five brackets. The maximum credit of approximately SEK 27,000 is subject to 3% reduction when income exceeds SEK 616,070.
Personal allowance amounts and income brackets. The top bracket for an allowance of SEK 13,332, is increased by SEK 6,240 to SEK 358,541.
Treatment of the following, effective July 1, 2018:
Employee/Family Medical Emergencies Host Country to taxable;
Family Annual Examinations Host Country to nontaxable.
Switzerland
Geneva
Income Tax: Corrected the communal tax base by removing the surtax and rebate levied on the cantonal tax. Previously, the communal tax was overstated.
United States
Various American States
Income Tax: Completed all updates for the Tax Cuts and Jobs Act of 2017 (TCJA) with the following changes (see Appendix B for the full list):
Added a deduction for moving expenses to states that do not conform to the federal taxable treatment per the TCJA. This change was made to Arkansas, Hawaii, and Kentucky.
Corrected state itemized deductions when state tax exceeds USD 10,000. Previously, itemized deductions were understated, resulting in an overstatement of tax. This was introduced in the v.7.6.1 update for the TCJA. This change was made to Alabama, Delaware, District of Columbia, Hawaii, Idaho, Kentucky, Maine, Mississippi, Montana, Nebraska, South Carolina, Utah, and Wisconsin.
Arizona
Income Tax:
Corrected the calculation by restoring the itemized deduction phaseout. Previously, as a result of the v.7.6.1 update for the TCJA, the itemized deduction phaseout was not calculated.
Increased the following, effective January 1, 2018. All amounts listed are applicable to single taxpayers:
Bracket thresholds. The threshold for the top rate of 4.54% increased by USD 2,491 to USD 155,159.
Standard deductions. The standard deduction increased by USD 84 to USD 5,183.
Personal exemptions. The personal exemption increased by USD 50 to USD 2,200.
Arkansas
Income Tax: Updated the rates and brackets, including increasing the table from 6 to 7 tiers. The threshold for the new top rate of 6.9% applies to taxable income over USD 77,401, effective January 1, 2018.
District of Columbia
Income Tax: Made the following changes:
Added personal exemption and itemized deduction phaseouts applicable to income over USD 150,000 and USD 200,000, respectively.
Increased the following, effective January 1, 2018:
Standard deductions. The standard deduction increased by USD 850 to USD 6,500 for single taxpayers.
Personal and dependent exemptions. The exemptions increased by USD 2,375 to USD 4,150.
Hawaii
Income Tax: Increased the tax table from 9 to 12 tiers. The new top rate of 11% applies to taxable income above USD 200,000 for single taxpayers, effective January 1, 2018.
Idaho
Income Tax: Updated the rates and brackets. The new top rate of 6.925% applies to income over USD 11,279, effective January 1, 2018.
Illinois
Income Tax: Increased the personal exemption by USD 225 to USD 2,225, effective January 1, 2018.
Iowa
Income Tax:
Corrected the calculation by restoring the itemized deduction phaseout. Previously, as a result of the v.7.6.1 update for the TCJA, the itemized deduction phaseout was not calculated.
Increased the following, effective January 1, 2018:
Bracket thresholds. The threshold for the top rate of 8.98% increased by USD 1,980 to USD 71,910.
Standard deductions. The standard deduction increased by USD 60 to USD 2,030 for single taxpayers.
Kentucky
Income Tax: Made the following changes, effective January 1, 2018:
Changed from a 5 tier tax table with a top rate of 6% to a flat rate of 5%.
Increased the standard deduction by USD 50 to USD 2,530.
Maine
Income Tax:
Made the following updates for the legislation passed on September 12, 2018, retroactive to January 1, 2018:
Updated the personal exemption calculation to use state instead of federal amounts. The personal exemption is USD 4,150.
Updated the standard deduction calculation to use federal instead of state amounts.
Added personal exemption and deduction phaseouts. The phaseouts are applicable to income over USD 266,700 and USD 80,000, respectively, for single taxpayers.
Added a credit of USD 300 per dependent with a phaseout. The phaseout is applicable to income over USD 200,000 for single taxpayers.
Increased the bracket thresholds. The threshold for the top rate of 7.15% increased by USD 750 to USD 50,750 for single taxpayers, effective January 1, 2018.
Michigan
Income Tax: Corrected the foreign tax credit to calculate for tax paid to Canada and Canadian provinces only. Previously, a credit was provided for Swiss cantonal tax, resulting in a potential understatement of tax.
Minnesota
Income Tax: Corrected the calculation by restoring personal exemptions and the itemized deduction phaseout, as well as reverting standard deductions to the pre-TCJA amounts. Previously, as a result of the v.7.6.1 update for the TCJA, personal exemptions and the itemized deduction phaseout were not calculated, and the higher, post-TCJA standard deductions were used.
Montana
Income Tax: Increased the following, effective January 1, 2018:
Tax bracket thresholds. The threshold for the top rate of 6.9% increased by USD 500 to USD 17,900.
Standard deductions, personal exemption, and dependent exemption.
Nebraska
Income Tax: Increased the following, effective January 1, 2018. All amounts listed are applicable to single taxpayers:
Tax bracket thresholds. The threshold for the top rate of 6.84% increased by USD 830 to USD 30,420.
Standard deductions. The deduction increased by USD 1,050 to USD 6,750.
Personal and dependent exemption credits.
New Mexico
Income Tax: Corrected the itemized deduction calculation by excluding state income taxes. Previously, state income taxes were included in itemized deductions, resulting in a potential understatement of tax.
North Carolina
Income Tax: Replaced the child tax credit with a child deduction, effective January 1, 2018. The maximum deduction is USD 2,500 per child and is phased out completely when income exceeds USD 60,000 for single taxpayers.
North Dakota
Income Tax: Increased the bracket thresholds. The threshold for the top rate of 2.9% increased by USD 11,600 to USD 424,950, effective January 1, 2018.
Ohio
Income Tax: Corrected the tax table amounts. Previously, income tax was potentially understated by USD 79.
Oklahoma
Income Tax: Made the following changes:
Added a cap of USD 17,000 on itemized deductions, effective January 1, 2018.
Corrected the itemized deduction calculation by excluding state income taxes. Previously, state income taxes were included in itemized deductions, resulting in a potential understatement of tax.
Corrected the standard deduction calculation by using state instead of federal amounts.
Oregon
Income Tax: Added income thresholds to the exemption credit. No credit is allowed if income exceeds USD 100,000 for single taxpayers.
Rhode Island
Income Tax: Increased the following, effective January 1, 2018:
Bracket thresholds. The threshold for the top rate of 5.99% increased by USD 3,850 to USD 142,150.
Standard deductions. The standard deduction increased by USD 225 to USD 8,525 for single taxpayers.
Exemption, phaseout step, and phaseout threshold.
South Carolina
Income Tax: Increased the bracket thresholds. The threshold for the top rate of 7% increased by USD 210 to USD 14,650, effective January 1, 2018.
Utah
Income Tax: Made the following changes, effective January 1, 2018:
Decreased the tax rate by 0.05% to 4.95%.
Increased the tax credit phaseout thresholds. The threshold increased by USD 111 to USD 13,978 for single taxpayers.
Vermont
Income Tax: Made the following changes, effective January 1, 2018:
Updated the tax calculation to start with adjusted gross income. Previously, the calculation started with federal taxable income.
Eliminated the itemized deduction calculation.
Updated the rates and brackets, including decreasing the table from 5 to 4 tiers. The new top rate of 8.75% applies to taxable income above USD 195,450 for single taxpayers.
Virginia
Income Tax: Corrected the calculation by restoring the itemized deduction phaseout. Previously, as a result of the v.7.6.1 update for the TCJA, the itemized deduction phaseout was not calculated.
Wisconsin
Income Tax: Increased the following, effective January 1, 2018. All amounts listed are applicable to single taxpayers:
Bracket thresholds. The threshold for the top rate of 7.65% increased by USD 7,400 to USD 252,150.
Standard deductions and phaseout thresholds. The deduction increased by USD 310 to USD 10,580 and the threshold by USD 450 to USD 15,249.
