Payroll State Tax Calculation

The CT State Tax Calculation calculates Connecticut state tax using state-specific tables for exemptions, 3% phase-out, tax recapture, and personal tax credits.

Process Specific Set-up

Prior to processing the Pre-Calculation Journal in Payroll Processing, the user must enter the Connecticut State Tax Codes along with the Exemptions, Tax Detail, 3% Phase-Out, Tax Recapture, and Personal Credits tables for the payroll frequencies and tax status codes of the employees who will be processed in the payroll.

Processing

The payroll Pre-Calculation Journal and Payroll Calculation process use the special tables for the state of Connecticut when calculating state tax. This same processing also occurs when calculating state tax for a Manual Check and in the Employee Worksheet, IRS Tax Levy, and the What-If Paycheck Simulator in Employee Access Center.

The following is a brief outline of the Connecticut State Tax calculation:

The system calculates the state gross wages for the pay period by adding the gross pay for the employee's pay codes that are subject to state taxes, adding any state taxable benefits, and subtracting any deduction amounts that are exempt from state taxes.
The system multiplies the number of Dependents claimed for the employee on the State section of the Taxes page in Employee Information by the Dependent Allowance amount in the main State Tax Codes table for the employee's current state code, tax filing status and pay frequency. This amount is then subtracted from the state gross wages, and if the result is less than zero, the state tax is set to zero and the process skips to step 8 to add the additional withholding. PLEASE NOTE: Connecticut does not actually have a dependent allowance amount. The purpose of this step is to provide a way to allow employees who filled out a CT-W4T form to have a specific tax amount withheld for state taxes. For example, you could set the Dependent Allowance amount to 100.00, and give the employee 9999 dependents, and set the Additional Withholding for the state to the exact amount to be withheld.
If the new Connecticut State Tax Exemptions table has entries for the employee's current state code, tax filing status and pay frequency, the system will compare the employee's state gross wages (calculated in step 1) with the earnings amount in the new exemptions table to find the appropriate row to use for the exemption amount. If the employee's state gross wages are more than the amount listed in a row in the table, then it will use the next row, until it finds the row where the employee's state gross wages are less than the earnings amount listed in the table. The exemption amount is subtracted from the state gross wages. The result of this calculation is used as the value of the taxable wages for the calculation in step 4. If the result is less than or equal to zero, the state tax amount is set to zero and the process skips to step 8 to add the additional withholding.
The system calculates the initial state tax withholding amount in the standard way, by comparing the state gross wages minus the exemption amount (i.e. the taxable wages calculated in step 3) with the earnings amounts in the Tax Detail table. If the employee's taxable wages are more than the amount listed in a row in the table, then it will use the next row, until it finds the row where the employee's taxable wages are less than the amount listed in the table. The withholding is set to the value of the tax amount, then the tax percent is multiplied by the difference between the employee's taxable wages and the value of the previous row's earnings. The result is added to the tax amount.
If the new Connecticut 3% Phase-Out table has entries for the employee's current state code, tax filing status and pay frequency, the system will compare the employee's state gross wages (calculated in step 1) with the earnings amount in the new 3% phase-out table to find the appropriate row to use for the amount to add to the state taxes. If the employee's state gross wages are more than the amount listed in a row in the table, then it will use the next row, until it finds the row where the employee's earnings are less than the amount listed in the table. The 3% phase-out amount is then added to the employee's state tax amount.
If the new Connecticut Tax Recapture table has entries for the employee's current state code, tax filing status and pay frequency, the system will compare the employee's state gross wages (calculated in step 1) with the earnings amount in the new tax recapture table to find the appropriate row to use for the amount to add to the state taxes. If the employee's state gross wages are more than the amount listed in a row in the table, then it will use the next row, until it finds the row where the employee's earnings are less than the amount listed in the table. The recapture amount is then added to the employee's state tax amount.
If the new Connecticut Personal Credits table has entries for the employee's current state code, tax filing status and pay frequency, the system will compare the employee's state gross wages (calculated in step 1) with the earnings amount in the new personal credits table to find the appropriate row to use for the credit percent to reduce the state taxes. If the employee's state gross wages are more than the amount listed in a row in the table, then it will use the next row, until it finds the row where the employee's earnings are less than the amount listed in the table. The credit percent is subtracted from 1.00 and then the employee's state tax amount is multiplied by the resulting decimal value.
The system will then add to the state taxes the amount of the employee's Additional Withholding for the State. If the employee's CT-W4 requested to have an amount reduced from the state taxes, then you should enter a negative amount in the Additional Withholding.

Data Definitions

The following database tables have been created for Connecticut State Tax:

Table name: ct_stexempt

Exemptions

Field	Database Field	Type	Length	Description
State Code	state_id	Character	2	State code corresponding to the employee's current state in the state section of employee tax information.
Pay Frequency	pay_freq	Character	1	Payroll frequency corresponding to the employee's pay frequency in the payroll tab of employee information.
Tax Filing Status	marital	Character	2	Tax filing status corresponding to the employee's marital status in the state section of employee tax information.
Earnings	ear	Decimal	10,2	State gross wages for the exemption amounts listed. Should be entered as the annual value divided by the number of pays corresponding to the pay frequency.
Exemption Amount	exempt_amt	Decimal	10,2	Value of the exemption amount for the state code, pay frequency, tax filing status, and federal gross amount. Should be entered as the annual amount divided by the number of pays.

Table name: ct_stphaseout

3% Phase-Out

Field	Database Field	Type	Length	Description
State Code	state_id	Character	2	State code corresponding to the employee's current state in the state section of employee tax information.
Pay Frequency	pay_freq	Character	1	Payroll frequency corresponding to the employee's pay frequency in the payroll tab of employee information.
Tax Filing Status	marital	Character	2	Tax filing status corresponding to the employee's marital status in the state section of employee tax information.
Earnings	ear	Decimal	10,2	State gross wages for the exemption amounts listed. Should be entered as the annual value divided by the number of pays corresponding to the pay frequency.
3% Phase-Out Amount	amt	Decimal	10,2	Value of the 3% phase-out amount for the state code, pay frequency, tax filing status, and federal gross amount. Should be entered as the annual amount divided by the number of pays.

Table name: ct_strecapture

Tax Recapture

Field	Database Field	Type	Length	Description
State Code	state_id	Character	2	State code corresponding to the employee's current state in the state section of employee tax information.
Pay Frequency	pay_freq	Character	1	Payroll frequency corresponding to the employee's pay frequency in the payroll tab of employee information.
Tax Filing Status	marital	Character	2	Tax filing status corresponding to the employee's marital status in the state section of employee tax information.
Earnings	ear	Decimal	10,2	State gross wages for the exemption amounts listed. Should be entered as the annual value divided by the number of pays corresponding to the pay frequency.
Recapture Amount	amt	Decimal	10,2	Value of the recapture amount for the state code, pay frequency, tax filing status, and federal gross amount. Should be entered as the annual amount divided by the number of pays.

Table name: ct_stcredits

Personal Credits

Field	Database Field	Type	Length	Description
State Code	state_id	Character	2	State code corresponding to the employee's current state in the state section of employee tax information.
Pay Frequency	pay_freq	Character	1	Payroll frequency corresponding to the employee's pay frequency in the payroll tab of employee information.
Tax Filing Status	marital	Character	2	Tax filing status corresponding to the employee's marital status in the state section of employee tax information.
Earnings	ear	Decimal	10,2	State gross wages for the exemption amounts listed. Should be entered as the annual value divided by the number of pays corresponding to the pay frequency.
Credit Percent	cred_per	Decimal	6,5	Decimal value of the credit percent for the state code, pay frequency, tax filing status, and federal gross amount.

Table name: ct_bstexempt

Future Changes Exemptions

Field	Database Field	Type	Length	Description
Control Number	batch_no	Character	8	Unique control ID for batch records entered
Effective Date	eff_date	Date	10	Date when changes should be posted to the live table
State Code	state_id	Character	2	State code corresponding to the employee's current state in the state section of employee tax information.
Pay Frequency	pay_freq	Character	1	Payroll frequency corresponding to the employee's pay frequency in the payroll tab of employee information.
Tax Filing Status	marital	Character	2	Tax filing status corresponding to the employee's marital status in the state section of employee tax information.
Earnings	ear	Decimal	10,2	State gross wages for the exemption amounts listed. Should be entered as the annual value divided by the number of pays corresponding to the pay frequency.
Exemption Amount	exempt_amt	Decimal	10,2	Value of the exemption amount for the state code, pay frequency, tax filing status, and federal gross amount. Should be entered as the annual amount divided by the number of pays.

Table name: ct_bstphaseout

Future Changes 3% Phase-Out

Field	Database Field	Type	Length	Description
Control Number	batch_no	Character	8	Unique control ID for batch records entered
Effective Date	eff_date	Date	10	Date when changes should be posted to the live table
State Code	state_id	Character	2	State code corresponding to the employee's current state in the state section of employee tax information.
Pay Frequency	pay_freq	Character	1	Payroll frequency corresponding to the employee's pay frequency in the payroll tab of employee information.
Tax Filing Status	marital	Character	2	Tax filing status corresponding to the employee's marital status in the state section of employee tax information.
Earnings	ear	Decimal	10,2	State gross wages for the exemption amounts listed. Should be entered as the annual value divided by the number of pays corresponding to the pay frequency.
3% Phase-Out Amount	amt	Decimal	10,2	Value of the 3% phase-out amount for the state code, pay frequency, tax filing status, and federal gross amount. Should be entered as the annual amount divided by the number of pays.

Table name: ct_bstrecapture

Future ChangesTax Recapture

Field	Database Field	Type	Length	Description
Control Number	batch_no	Character	8	Unique control ID for batch records entered
Effective Date	eff_date	Date	10	Date when changes should be posted to the live table
State Code	state_id	Character	2	State code corresponding to the employee's current state in the state section of employee tax information.
Pay Frequency	pay_freq	Character	1	Payroll frequency corresponding to the employee's pay frequency in the payroll tab of employee information.
Tax Filing Status	marital	Character	2	Tax filing status corresponding to the employee's marital status in the state section of employee tax information.
Earnings	ear	Decimal	10,2	State gross wages for the exemption amounts listed. Should be entered as the annual value divided by the number of pays corresponding to the pay frequency.
Recapture Amount	amt	Decimal	10,2	Value of the recapture amount for the state code, pay frequency, tax filing status, and federal gross amount. Should be entered as the annual amount divided by the number of pays.

Table name: ct_bstcredits

Future Changes Personal Credits

Field	Database Field	Type	Length	Description
Control Number	batch_no	Character	8	Unique control ID for batch records entered
Effective Date	eff_date	Date	10	Date when changes should be posted to the live table
State Code	state_id	Character	2	State code corresponding to the employee's current state in the state section of employee tax information.
Pay Frequency	pay_freq	Character	1	Payroll frequency corresponding to the employee's pay frequency in the payroll tab of employee information.
Tax Filing Status	marital	Character	2	Tax filing status corresponding to the employee's marital status in the state section of employee tax information.
Earnings	ear	Decimal	10,2	State gross wages for the exemption amounts listed. Should be entered as the annual value divided by the number of pays corresponding to the pay frequency.
Credit Percent	cred_per	Decimal	6,5	Decimal value of the credit percent for the state code, pay frequency, tax filing status, and federal gross amount.