Document Number
88-135
Tax Type
Employer Income Tax Withholding
Description
Wage reductions and employer credits
Topic
Withholding of Tax
Date Issued
06-20-1988
June 20, 1988


Dear*****************

This is in reply to your letter of March 30, 1983, in which you request information concerning Virginia's treatment of "Wage Reductions" or "Employer Credits" for state income tax withholding purposes.

Federal adjusted gross income is the starting point for determining an individual's Virginia adjusted gross income and Virginia taxable income. Accordingly, those employee benefits that are included in federal adjusted gross income are similarly included in Virginia adjusted gross income. Conversely, employee benefits excluded from federal adjusted gross income are excluded from Virginia adjusted gross income.

The Code of Virginia is silent on whether "Wage Reductions" or "Employer Credits" are subject to state income tax withholding. However, because Virginia is a conformity state, since they are excluded from federal adjusted gross income, they are excluded from Virginia adjusted gross income and withholding of Virginia income tax is not required.

Let me know if I may be of further assistance.

Sincerely,



W. H. Forst
Tax Commissioner

Rulings of the Tax Commissioner

Last Updated 08/25/2014 16:46