COLA payment tax information
Last week, we received updated guidance from the system office regarding how the one-time supplemental Cost of Living Adjustment (COLA) payments will be processed.
We received confirmation that these will be paid as separate checks/direct deposit. We also received an update that withholdings will occur at the supplemental rate, which is a change from previous guidance. The FAQs have been adjusted to reflect this updated guidance.
In alignment with the state of Georgia’s approach, the supplemental payment will be processed and paid as a separate payment and will be taxed at supplemental rates established by federal and state taxing agencies. These rates include 22% federal withholding, 6.2% OASDI withholding (social security), 1.45% Medicare withholding, and state withholding. State rates will vary by state. The rationale for using a separate check and a flat tax withholding rate is that this will make it easier for individuals to anticipate and plan for their net pay amounts on these one-time payments.
Please note that this does not mean that the payment will be taxed at a different rate—rather, the initial payroll withholdings will be made at the supplemental rate. If amounts withheld exceed annual tax burden, then individuals are eligible for the remainder as a refund when tax returns are filed. Of course, individuals may wish to consider their own personal tax implications and consult their tax advisors if there is a need to adjust for a change in withholding.
Both the ongoing salary increase and one-time payment for the $5,000 COLA will be included in eligible employee paychecks in April:
- Pay date (biweekly-paid): Friday, April 22
- Pay date (monthly-paid): Friday, April 29
For additional questions, please visit the FAQ pages on the UGA Human Resources website: