If you’re an employee in a Louisiana company, you’ve wondered what’s up with the taxes exiting your paycheck. You might have noticed that your own company doesn’t administer payroll. What is a PEO, and what are the tax rates of 2024?

How a Co-Employer Like Canal HR Helps Companies

The PEO saves the company money. The company’s managers save time away from their customers (they spend figuring out all these other things.) Your employees will receive benefits you didn’t understand enough to offer them.

Exactly What a PEO Saves for a Company

When paperwork dealing with city, state, and federal subjects needs to be submitted or submitted at all (you were too busy running your business,) then a company gets fined. Penalties happen. One of these subjects, for instance, is what are the tax rates of 2024. A PEO takes all that out of your hands.

When you hire a new employee, you take yourself out of the front office to interview them. That doubles the efforts in the front office. These workers might get paid more for this. A PEO saves the company managers from losing that time and money.

The main thing is focus. You didn’t open your own business for your health. You began it to reach your goals. You opened it because your professional drive wouldn’t let you do any less. You opened your business to help people. A PEO allows you to concentrate on the business.

A PEO and Payroll Taxes

Work From Home Employees

Before we get to what are the tax rates of 2024, company managers should understand how they affect employees. For instance, you might have employees working from home. This happens for several reasons, such as a new baby or a shift to hybrid or remote work after the pandemic. 

Federal Taxes

Whatever the reasons companies allow their employees to work from home, their payroll taxes are no different from on-site workers. If you receive a W-2 from an employer, you are taxed at the same federal rate as on-site employees. Louisiana employees can’t deduct work expenses if they work at home.

State Taxes

State taxes are a little different. The Louisiana Department of Revenue defines work from home, remote worker, and/or digital nomad as:

• A Louisiana resident since December 2021

• Who is covered by health insurance

• Is a full-time remote worker

• Has filed tax returns

• Who performs the majority of work in Louisiana remotely

Louisiana companies are required to file state income taxes for remote workers who live in another state in that other state. If the other state doesn’t have state taxes, then Louisiana will use Louisiana’s state tax.

Reasons for Changes in Louisiana Income Taxes

Now it’s time to understand the taxes the PEO Canal HR administers. It’s no secret that the years since the pandemic have been chaotic. Locking up over 400 million people results in panic. They spend differently, and they hoard. That’s human nature.

Inflation

Unfortunately, it also drives up prices. Inflation keeps people from buying more. It prevents companies from paying their employees more, even when they can return to their brick-and-mortar offices. When offices have no customers spending money there, that will happen.

The IRS adjusts tax brackets according to several things, one of which is inflation. The Cost of Living Adjustment or COLA 2023 was the largest in 40 years at 8.7 percent. This increase drove prices up almost to the point of no return.

What are the Tax Rates of 2024 in Louisiana

Thus, in 2021, a law was passed eliminating a federal income tax. Taxpayers would now pay a higher state income tax in return. State income tax brackets for the tax year 2022 for individuals were adjusted accordingly:

•  Those making up to $12,500 were formerly paying two percent in income taxes. They would now pay 1.85 percent.
• Those making up to $37,500 were formerly paying four percent in income taxes. They would now pay 3.50 percent.
• Those making up to and over $50,000 were formerly paying six percent in income taxes. Now, they would pay 4.25 percent.

For married filing jointly or surviving qualified spouse, the changes were:

• The first $25,000 was formerly taxed at two percent. It would now be taxed at 1.85 percent.
• The next $75,000 was formerly taxed at four percent. It would now be taxed at 3.50 percent.
• Up to and over $100,000 was formerly taxed at six percent. It would now be taxed at 4.25 percent.

What are the Tax Rates of 2024

Inflation reared its ugly head in the August statistics. Food, shelter, and power were the vanguard of items, forcing inflation ever higher. The Fed quoted the rise at the consumer price index of 0.3 percent and the inflation gauge of 4.3 percent. What does that mean for 2024 taxes?

These are the income tax brackets and rates for 2024:

• Individuals will pay ten percent on incomes up to $11,000.
• Individuals will pay 12 percent on incomes from $11,001 to $44, 725.
• Individuals will pay 22 percent on incomes from $44,726 to $95,375.
• Individuals will pay 24 percent on incomes from $95,376 to $182,100.
• Individuals will pay 32 percent on incomes from $182,101 to $231,250.
• Individuals will pay 35 percent on incomes from $231,251 to $578,125.
• Individuals will pay 37 percent on incomes over $578,125.

Married filing jointly, head of household, and married filing separately have different tax brackets. Their tax schedule can be found here. You will see that income taxes rose to meet rising inflation.

Let Canal HR Handle Your Taxes

PEOs manage finances, among other company things. A PEO saves a company time and money that could be spent on their customers. With all the changes to the tax brackets, not to mention inflation, let Canal HR manage your taxes, Q1 planning, and the coming tax season with our team of experts.