2020 Colorado State Withholding Not Effective Dated?
We are testing Tax Update 20-B, which includes changes to the Colorado State Withholding calculation.
Almost all employees have a change in their taxation from the previous period, mostly an increase in taxes. This is unexpected because the state of Colorado's official document DR-1098 states that the employer has a choice how to tax employees who have not completed a 2020 state W-4, almost identically to the IRS regulations on federal tax withholding for employees who do not fill out a 2020 federal W-4.
For employees who do not fill out a 2020 W-4, the employer may choose to keep deducting state withholding taxes using the pre-2020 method, or may automatically use the 2020 taxation method.