Tax

State / Jurisdiction

• Federal / All
• Vermont
• Washington D.C.

Federal / All

New 2025 IRS Health Plan Premium Affordability Threshold 

The affordability percentage for 2025 will increase to 9.02% of an employee's household income, according to the Internal Revenue Service (IRS) table of Required Contribution Percentages. In comparison, the 2024 plan year level is 8.39%. The Affordable Care Act (ACA) threshold determines eligibility for federally subsidized coverage from a public exchange and impacts employers' potential liability for play-or-pay assessments. Employers who anticipate they will meet the ACA's limit under the safe harbor provisions should review the new required contribution rate for coverage effective January 1, 2025. 

IRS Launches Eligibility Information Page for Employer-Provided Childcare Credit 

Employers may qualify for an annual tax credit of up to $150,000 to help cover a portion of facility, resource, and referral costs associated with providing child care services for their employees. For more information about claiming the credit and requirements for qualification, refer to the Employer-Provided Childcare Tax Credit page on the IRS.gov website. 

IRS Announces Employee Retention Tax Credit Voluntary Disclosure Program (ERC-VDP) 

A new program will assist employers who erroneously benefitted from the ERC. The ERC was part of the CARES Act, providing a refundable tax credit against employment taxes to offset the economic downturn during the pandemic. Employers who apply and qualify for the Voluntary Disclosure Program receive a discount on the repayment for credits mistakenly received and will not be subject to interest and penalties. Refer to the FAQ page on the IRS website for details and program application form. Deadline to participate in the program is March 22, 2024. 

Vermont

Vermont Child Care Contribution Tax 

Effective 7/1/24, Vermont employees will have an additional payroll income tax for child care contributions. According to Act 76 of 2023, related to child care and early childhood education, the Department of Taxes will implement and administer a new Child Care Contribution (CCC). Vermont employers will be required to pay a 0.44% payroll tax on all employee wages earned, and employers may deduct and withhold a maximum of 25% of the required contribution (i.e., 0.11%) from employee wages. This tax will be used to fund investments in Vermont's child care system. More details can be found in this tax guide.  

Washington D.C.

D.C. Updates Tax Rate for Paid Family Leave 

The District of Columbia increased its Paid Family Leave (PFL) tax rate from 0.26% to 0.75% of paid wages for each covered employee as of July 1, 2024. The first payment at the new 0.75% rate for wages reported during the third quarter of 2024 (July 1, 2024 through September 30, 2024) is due October 31, 2024.  For more information, visit the DC Paid Family Leave website. 

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