Concept: Auto Adjust Taxable Wages Over the Limit
Effective for payroll results with payment dates as of 2025-01-01, we automatically adjust flat tax rate statutory taxes that have taxable wage limits when you calculate payroll. This helps ensure workers' current pay calculations don't exceed the most recent taxable wage base limit.
We auto adjust taxable wages over the wage limit for these type deductions for the mentioned states:
Deduction Type | State |
|---|---|
PFML (Paid Family Medical Leave) |
|
SDI (State Disability Insurance) |
|
TDF (Temporary Disability Fund) | New Jersey |
VDI (Voluntary Disability Insurance) | New Jersey |
These deduction types also auto adjust taxable wages:
- OASDI (Old-Age, Survivors, and Disability Insurance)
- SUI (State Unemployment Insurance)
- SUI surcharge
- FUI (Federal Unemployment Insurance)
Workday compares the taxable wage base to the wage limit for a deduction to automatically adjust the taxable wage base back down to the limit. The limit may or may not have changed since the last pay calculation, added history payments from a previous system, or manual adjustments made to taxable wages, which impact the taxable wages YTD amounts.
Example:
When the:
- Taxable wage limit is 5,000 USD,
- Persisted taxable wages is 12,000 USD, and
- Current subject wages YTD is 7,000 USD,
Workday reduces the taxable wages by 7,000 USD so the YTD taxable wages equals the limit (5,000 USD). When the subject wages fall below the limit, Workday reduces the taxable wage base down to equal the subject wage base because taxable wages shouldn't exceed subject wages.
Example:
When the:
- Taxable wage limit is 5,000 USD,
- Persisted taxable wages is 12,000 USD, and
- Current subject wages YTD is 3,000 USD,
We recommend you review auto adjusting results for OASDI, SUI, and FUI type deductions because you may need to make manual adjustments for:
- OASDI deductions when you enter negative wages for OASDI tips after it meets the taxable wage limit.
- SUI and FUI credit reduction taxable wages when a worker moves to a different state in a calendar year.
- OASDI and FUI credit reduction taxable wages when negative wages bring subject wages below 0. Workday only adjusts up to the amount of persisted taxable wages for the current pay component.
If there isn’t an additional on-cycle pay run before the end of the quarter or relevant filing period, you’ll need to run an on-demand additional payment to adjust prior to the end of the filing period or you could have negative wages in the new filing period.