Effective January 1, 2022, municipal income tax withholding returned to the Pre-COVID-19 emergency declaration "General Rule". Prior to January 1, 2022, employers were to follow the governor's emergency declaration "temporary rule" in which they withheld based on their regular place of employment or "principal place of work". Under the "General Rule", employers must withhold municipal income taxes based on where an employee's work is actually performed. While this rule was in effect before COVID-19, there could be significant changes to employer withholdings due to new hybrid or remote work arrangements.
Additionally, in July 2021, House Bill 110 was signed into law. This Bill provides for employee refunds back to January 1, 2021, if taxes were withheld to an employee's principal place of work and the employee neither lived nor physically performed services in the withheld municipality. This could be advantageous for employees to consider if they worked from home and their homes were in a lower taxing municipality or a no-tax municipality or township.
As with most tax legislation, certain exceptions to the General Rules apply. If you have questions on these changes or exceptions, don't hesitate to contact Hall, Kistler and Company at (330) 453-7633, info@hallkistler.com or www.www.hallkistler.com.
