The U.S. Department of Labor (DOL) has released new guidance that helps businesses understand the new income-based payment rules.
The DOL said it’s updating the current guidelines, which require businesses to make sure that any income they receive from an employer must be taxed at least as high as the federal tax rate.
That could mean a business could be paying $2,400 in payroll taxes, for example, but have to pay $2.00 in income taxes on the same $2 amount.
Businesses that earn more income will also have to include that income in their income tax return, but those income taxes will be reduced to 0 percent of the business’s income.
The rules also apply to small businesses and partnerships.
The guidelines will go into effect Jan. 1.
The U of A announced last week that it’s offering a tax holiday for its employees who earn more than $100,000 a year.
The tax holiday is also in place for students, who have a tax exemption of $10,000 or less.
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