The following tax methods are supported:
| Tax method type | Description |
|---|---|
OPTIMIZED | Selects the most appropriate tax rate by estimating annual earnings based on earnings in the current month. This is the best approach to use as a default. |
FLAT | Applies a flat tax of 22% on the first $1M and 37% on the excess (for tax year 2023). |
AGGREGATION | Applies an aggregated tax rate based on prior or current payroll wages. May exceed the flat rate of 22% for high wage-earners. |
When submitting payments to contractors, no tax method is used, since no taxes are calculated for these payments. Specify the OPTIMIZED method in these cases.