With the enactment of HB 217, Vermont created a new payroll tax to fund its Child Assistance Program, which subsidizes child care costs for certain families.
The details:
Effective July 1, 2024, the payroll tax will be 0.44% of an employee’s covered wages. Covered wages consist of all wages and benefits that are subject to federal income tax withholding.
“Covered employers” are required to pay a minimum amount equal to 75% of the required 0.44% payroll tax for each “covered employee.”
Covered employers are defined as a person or entity who employs one or more covered employees and is required to withhold Vermont income tax from wages paid to their employees.
Covered employees are defined as individuals who receive payments with respect to services performed for an employer from which the employer is required to withhold Vermont income tax.
Under HB 217, employers are allowed to deduct 25% of the tax, or 0.11% from employee’s wages. If employees are under withheld, the employers is responsible for the full amount of any unpaid employee contributions.
Employers are required to remit the employee and employer contributions to the Vermont Department of Taxes (VDOT), in the same manner as employees income tax withholding.
Self-employed individuals are required to pay 0.11% of their self-employment income and remit to the VDOT at the same time and in the same manner as their estimated Vermont withholding income tax.
Next steps:
· Effective July 1, 2024, Vermont covered employers must remit 0.44% of covered employees’ wages to the Agency and employers have the option to withhold up to 0.11% of employees’ wages to offset the employers’ 0.44% obligation.
· The tax is remitted to the Department of Tax in the same manner as VT SIT.
· We will create a Tax Profile for the VT Child Care Contribution on your behalf in mid-June 202.
· The employer is responsible for remitting the entire 0.44% required.
Have questions?
Please contact your ADP® Service Representative with any questions.