Regulatory Roundup August 2023

With the end of summer approaching, state legislatures passed several bills and amendments in August. At the federal level, the Internal Revenue Service (IRS) announced the 2024 required affordability rate for healthcare coverage under the Affordable Care Act (ACA). Meanwhile, Alaska, Alabama, Illinois, Maine, Nebraska, and Vermont all saw updates from their respective legislatures. These ranged from tax fraud warnings to a new Paid Family and Medical Leave (PFML) program to lower income taxes. Learn more about these updates and more below in this month's Regulatory Roundup.

2024 ACA Affordability Rates

The IRS has announced the 2024 ACA affordability rate will be 8.39%, which is 0.73% lower than the 2023 rate of 9.12%. This means for employer-sponsored health coverage in 2024 to be deemed “affordable” under the ACA its self-only coverage offering can’t require an employee to contribute more than 8.39% of their household income.

Alabama Overtime Pay Exemption

Starting January 1, 2024, full-time hourly employees receiving overtime for more than 40 hours worked per week through June 30, 2025, will be classified as exempt. H.B. 2173 will, however, still require employers to report overtime wages for 2023 by January 31, 2024. For more on the new overtime pay withholding and reporting requirements, refer to the Alabama Department of Revenue’s published instructions.

Alaska Unemployment Tax Fraud

The state’s Department of Labor and Workforce Development (DLWD) recently warned employers about a scam involving third party demands for payment of the Employment Security tax. However, quarterly reports and payments to the DLWD don’t go through a third party but to the department itself, either in person, by mail, or on the TaxWeb site. Employers receiving such requests should contact the DLWD at (907) 465-2757.

Illinois Legislative Updates

Several state legislative amendments and bills signed by Governor Pritzker will go into effect on January 1, 2024. These updates include, but aren’t limited to:

• Transportation Benefit Program: The new Transportation Benefits Program Act (TBPA) will provide employees the chance to use voluntary deductions to purchase public transit passes. The law will apply to employers in or around the Cook County area with 50 or more eligible employees.
• Child Extended Bereavement Leave Act (CEBLA): The CEBLA will require employers with 250 or more full-time employees to provide up to 12 weeks of unpaid leave for workers who experience the loss of a child due to suicide or homicide. Employers with 50-249 full-time employees must instead provide up to six weeks of leave.
• Employee Organ Donor Leave Amendments: Employers with 51 or more employees who have been employed full-time for six months must provide those employees up to 10 days of paid time off to serve as an organ or bone marrow donor.

Maine PFML

Governor Janet Mills recently signed into law a new PFML program that’ll begin collecting contributions on January 1, 2025. Benefits will be available starting January 1, 2026, and funded by a 1% payroll tax split evenly between employers and employees. The program will allow eligible employees to take up to 12 weeks of paid leave for either medical or family leave. Employees may take both family and medical leave within the same year but will only be eligible for up to 16 weeks within that year.

Nebraska Income Taxes

Income tax rates for some Nebraska residents will decrease in 2024 and continue to decrease annually through 2027. Signed into law by Governor Jim Pillen, LB 754 not only decreases income taxes for those earning over $18,000 a year but also phases out one of the existing tax brackets entirely.

Vermont Childcare Payroll Tax

On July 1, 2024, employers in Vermont will be required to start making contributions to the state’s new Child Care Financial Assistance Program (CCFAP). A 0.44% payroll tax split between employers and employees will fund the program. Employers may deduct up to 0.11% of the tax from employee wages and must cover the other 0.33% themselves. Contributions will be collected by the state’s Department of Taxes and deposited into a special fund.

Additional Information

Get more details on the compliance updates from August here:

• IRS Releases 2024 ACA Affordability Rate
• Alabama Overtime Pay Exemption Effective January 2024
• Alaska Issues Unemployment Tax Fraud Alert
• Illinois Legislative Updates - August 2023
• Maine Paid Family and Medical Leave
• Nebraska Lowers Income Tax Rates
• Vermont Childcare Program Payroll Tax

Bookmark our resource library and come back monthly for Regulatory Roundups of tax and compliance alerts you need to know. For any other frequently asked questions or general assistance, refer to our Administrator Support page for support contact information, quick how-to guides or training courses, important PEAK articles, and more. Remember to follow us on Facebook, LinkedIn, and Twitter for urgent updates.

This information is provided as a courtesy, may change, and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney, or Advisor.