[US] January 2021 payroll tax updates: OR, CT & MA

With a new year come new changes and updates to federal and state payroll requirements. Learn more about what payroll policies will be changing on January 1, 2021, in order to prepare for if and how they will impact your business.

In this article

Eugene, Oregon: Community Safety Payroll Tax

Effective January 1, 2021, the City of Eugene, Oregon will impose a payroll tax on employees working for an employer within the Eugene city limits. This is part of the Community Safety Payroll Tax Ordinance (No. 20616) and is being implemented to provide long-term funding for community safety services. More details are available here. Note that this tax is based on the employer presence within Eugene. Not sure if your business is within Eugene City Limits? Find out here

How this payroll tax is calculated

The payroll tax is paid by employers and employees. Overtime and supplemental wages are subject to the community safety payroll tax however overtime wages and hours are not used to calculate the tax rate.

Employee Rates

Employee rates are calculated based on the gross wages for the pay period, minus any overtime wages. This tax rate chart is then used to determine the applicable tax rate for the applicable pay period.

Employer Rates

The employer payroll tax rate is .0021, unless the employer had two or less employees during the year, in which the tax rate is .0015 on subject wages up to $100,000.

Exempt Employees

The exemption rule is based on state hourly minimum wage. The exemption will change as a result of planned increases to the state hourly minimum wage.

From January 1, 2021 through June 30, 2021, an employee is exempt from this payroll tax if they earn $12 per hour or less. Effective July 1, 2021, the state hourly minimum wage will increase to $12.75 per hour and again to $13.50 per hour effective July 1, 2022.

Steps to register, pay & file

Effective January 1st, 2021, this tax will automatically calculate and be withheld in Wave, so employers and employees don't have to do or change anything in order for the tax to apply.

Register

Liable employers are responsible for registering with the City of Eugene. This is not connected with the State of Oregon, so you cannot use that registration. Each employer will receive a separate registration number for this payroll tax.

Paying & filing

Liable employers are also responsible for paying and filing when the tax is due. The payroll tax is paid on a quarterly basis. Quarterly returns and payments are due on or before the last day of the month following the end of the quarter. The employer payroll tax has one form that needs to be submitted quarterly: Form EUG-PY-1, Employer Payroll Tax Quarterly Return

Steps to take in Wave

Setup: Effective January 1, 2021, the Eugene Community Safety payroll tax will be automatically applied and calculated on payrolls in Wave. There are no additional steps to take in order to set this up in Wave.

Processing payroll: A separate line item for this tax will appear on employee pay statements beginning January 1, 2021. Review this from PayrollRun PayrollPayroll Summary > Click Details. Under Taxes, you will see Eugene Community Safety Payroll Tax.

Due taxes: To help you prepare your payments, take the following steps in Wave to locate the quarter's accumulated tax liabilities:

  1. Click Reports > Click Payroll Wage & Tax Report
  2. Select the Start Date (e.g. Q1 will be Jan 1, 2021)
  3. Select the End Date (e.g. Q1 will be March 31, 2021)
  4. Click Generate Report
  5. Within Employer Summary > Locate Eugene Community Safety Payroll Tax 

Connecticut Paid Leave

Effective January 1, 2021 Connecticut Paid Leave (CTPL) is a new employee-paid payroll tax. Under the Paid Family and Medical Leave Act (PFMLA), employers in the state of Connecticut play a vital role in helping employees access paid time off, without the consequence of lost income. 

How this payroll tax is calculated

Beginning January 1, 2021, employers with one or more employees must participate by withholding a percentage of employee wages for contribution to Paid Leave Authority Trust Fund.

The tax rate is 0.5% of employee total wages up to the Social Security wage base (e.g. the 2021 wage base is $142,800, meaning the 2021 tax limit is $714.00). There is no employer match. Total wages include gross earnings from salary/hourly wages, vacation pay, holiday pay, tips, commissions, severance, etc. 

Steps to register, pay & file

Register

Effective November 1, 2020, employers can begin the process of registering, or opting-out, with the CT Paid Leave Authority. Registration begins here. All employers must register, even if applying for an exemption. 

Sole Proprietors and self-employed individuals can opt-in: you must remain in the plan for a minimum of 3 years, you will be automatically re-enrolled each year after unless you opt out in writing following the direction of CT Paid Leave Authority. Registration begins here.

If you offer a private Paid Family and Medical Plan, you can apply to CT Paid Leave Authority for an exemption from the program.

Paying & filing

Employers will be responsible for submitting the payroll deductions to the CT Paid Leave Authority directly. Sign into your account at ctpaidleave.org. Payments are due no later than the last business day of the month following the end of the business quarter: 

Quarter Due Date
Quarter 1 March 31, 2021
Quarter 2 June 30, 2021
Quarter 3 September 30, 2021
Quarter 4 December 31, 2021

Steps to take in Wave

Setup: Effective January 1, 2021, the CT Paid Leave payroll tax will be automatically applied and calculated on payrolls in Wave. For exempt employees, update their CT Paid Leave setting from the employee Tax Details. Click Payroll > Click Employees > Select Employee Name > Click Tax Details > Locate Connecticut Paid Leave.

Processing payroll: A separate line item for this tax will appear on employee pay statements beginning January 1, 2021. Review this from PayrollRun Payroll

Due taxes: To help you prepare your CT Paid Leave payments, take the following steps in Wave to view accumulated tax liabilities for the quarter:

  1. Click Reports > Click Payroll Wage & Tax Report
  2. Select the Start Date (e.g. Q1 will be Jan 1, 2021)
  3. Select the End Date (e.g. Q1 will be March 31, 2021)
  4. Click Generate Report
  5. Within Employer Summary > Locate Connecticut Paid Leave 

Massachusetts Paid Family Medical Leave

Paid Family and Medical Leave (PFML) is a state program that offers up to 26 weeks of paid leave that employees can use beginning January 1, 2021 for medical or family reasons. Read more here

PFML is funded through employee and employer contributions, which began on October 1, 2019. Paid Family Medical Leave (PFML) is different from the Family Medical Leave Act (FMLA). 

How this payroll tax is calculated

Contributions depend on an employer's average number of covered individuals from the previous calendar year (Jan 1-Dec 31). All employers are required to submit contributions on behalf of covered individuals. A general breakdown of contribution rates is available here. Individual contributions are capped by the Social Security income limit.

The PFML contribution rate is 0.75% of an employee’s gross wages, which is made up of 0.62% for medical leave and 0.13% for family leave.

If your workforce had an average of 25 or more covered individuals last year, you are required to pay 60% of the medical leave contribution and 0% of the family leave contribution. 

If your workforce included an average of fewer than 25 covered individuals last year, you are not required to contribute. You can deduct the PFML contribution from the covered individual’s wages. 

Steps to register, pay & file

Register

Businesses with at least one Massachusetts employee are required to register for Paid Family and Medical Leave through MassTaxConnect. This step-by-step page and video will show you how to register for Paid Family and Medical Leave (PFML) contributions.

Employers and businesses that provide PFML benefits equaling or exceeding those provided under the Commonwealth’s plan can apply for a Private Plan Exemption.

Paying & filing

Employers are responsible for completing a PFML quarterly report and submitting contributions on covered individuals for the previous calendar quarter through MassTaxConnect. Learn more here.

Steps to take in Wave

Set up: Employee PFML details (exemption and percent of medical leave that is employer covered) can be set for each employee during payroll setup when adding new employees or by going to Employees > Select Employee Name > Click Tax Details. If needed, set your business as PFML exempt by going to Settings > Tax Profile

Entering PFML in Wave: If a covered employee takes time off work under PFML, go to Timesheets and enter the applicable Sick Time. Doing this will calculate Sick Pay on the associated pay period, generate a separate line item for Sick Pay on the employee pay statement and reduce the employee's available sick pay balance. Read more about managing employee sick pay in Wave here.

Processing payroll: A separate line item for the Paid Family Medical Leave tax (employer and employee portions) and Sick Pay for time taken both appear on employee pay statements. Review this from PayrollRun Payroll.

Due taxes: To help you prepare your PFML payments, take the following steps in Wave to view accumulating and due taxes: Under Payroll > Click Taxes > Locate MA DFML - Paid Family & Medical Leave. 

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