On Dec. 20, 2017, Congress passed the Tax Cuts and Jobs Act that draws from separate measures passed by the House and Senate. It was signed into law on Dec. 22, 2017. The Act contains several key provisions that may impact Ohio University employees, which are noted below.
Tuition BenefitsEmployer-provided tuition assistance will remain tax-free, as conference members scrapped a House plan to make that benefit count as taxable income for employees.
The final bill preserves the Section 127 tax exclusion that allows employers to provide up to $5,250 of education assistance per year tax free to their employees at the undergraduate, graduate or certificate level.It also preserves the Section 117 tax exclusion for educational assistance for employees, their spouse or dependents at educational institutions.
Action needed from Ohio University employees at this time: None
2018 Tax RatesThe number of tax brackets remains at seven but the tax rates are lowered and income ranges are different.
- Current tax rates: 10 percent, 15 percent, 25 percent, 28 percent, 33 percent, 35 percent and 39.6 percent.
- New tax rates: 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent and 37 percent.
The Tax Cuts and Jobs Act also states that among other income tax adjustments for 2018:
- The deduction for personal exemptions, which had been $4,050 for 2017, is suspended until taxable years after Dec. 31, 2025.
- The standard deduction for single taxpayers and married taxpayers filing separately rises to $12,000 from $6,350.
- The standard deduction for married taxpayers filing joint returns rises to $24,000 from $12,700.
- The standard deduction for heads of household rises to $18,000 from $9,350.
The IRS has noted that several items, including the 2018 federal withholding tables, Form W-4, and Publications 15, 15-A, and 15-B, will be issued later than usual due to the enactment of the Tax Cuts and Jobs Act. Employers should continue to use the 2017 information until the 2018 versions are issued. While tax rates for 2018 will decrease, employees will not see an immediate change in their withholdings due to the delay in the release of the 2018 federal withholding tables.
Action needed from Ohio University employees at this time: None
RelocationAll relocation benefits will be included as taxable income. This includes relocation benefits paid directly to a third party (i.e., moving company), a change from previous tax law.
Action needed from Ohio University employees at this time: Employees who were provided relocation benefits in 2017 should contact the University Human Resources Service Center at 740-593-1636 or uhr@ohio.edu .
Employee Length of Service AwardsThe excludable amount for length of service awards will remain unchanged and allowable as long as it does not include: Cash, cash equivalent, vacations, meals, lodging, tickets to theater or sporting events, or securities.
Action needed from Ohio University employees at this time: None
Ohio University will continue to provide updates to employees regarding federal withholding tables and revised W-4 forms as information becomes available.