2025 GSA Payroll Newsletter

Jan. 8, 2025

Memorandum for:
All General Services Administration and GSA Payroll Services Client Agency Employees

From:
GSA
Payroll Services Division
Office of Chief Financial Officer

The 2025 payroll newsletter provides general information for all GSA and client agency employees. As a reminder, the GSA Office of the Chief Financial Officer Payroll Operations provides payroll services for executive branch, legislative branch and quasi-federal employees. This newsletter covers many payroll issues and serves as a summary of changes effective in calendar year 2025.

Some important changes occurring in 2025

• An across-the-board 1.7% pay raise, plus a 0.3% locality pay adjustment.
• Rate changes to Federal Employees Health Benefits.
• New 2025 Combined Federal Campaign contributions.
• Federal, state and local tax changes.
• Increase to Pre-Tax Qualified Transportation Fringe Benefits Program.

Review your earnings and leave statement in Employee Express

Each pay period, you are provided with your ELS, which you can use to confirm the accuracy of your pay and leave.

Although your servicing HR office, supervisor, and the GSA Payroll staff have many internal controls in place and make every effort to process your personnel, timecard, and payroll actions promptly and without error, administrative errors can happen. One way to ensure that these errors are kept to a minimum is for you to review your biweekly ELS. You can access your ELS through the Employee Express portal and use it to check for errors in your pay, benefits, deductions, and leave balances.

Reviewing your ELS every pay period is important, especially at the beginning of the calendar year when many changes are implemented. If there is an error in your pay from either pay calculation or withholdings and you are overpaid, you will be required to pay back any overpayments received as a debt to the government.

The Comptroller General of the United States has repeatedly ruled that if an employee has information available to them regarding their pay and an error occurs, they must pay back any resulting overpayments. In rare instances and on a case-by-case basis, an erroneous overpayment may be waived. In that event, the erroneous overpayment becomes taxable and will be reportable to the Internal Revenue Service to determine if it is taxable income.

Salary changes for 2025

Differences in your pay beginning in the pay period ending, or PPE, on Jan. 25, 2025, and electronically transferred on Jan. 31, 2025, may be the result of one or more of the following changes:

• An across-the-board pay raise of 1.7 percent, plus a 0.3 percent locality pay adjustment.
• Federal Employee Health Benefits Insurance rate changes.
• 2025 Combined Federal Campaign contributions.
• Federal Employee Dental and Vision Insurance Program changes.
• Federal, state, and local tax changes.
• Flexible Spending Account Health Care amounts increased.

Federal Income Tax Withholding, IRS Form W-4

The IRS Form W-4, Employee’s Withholding Allowance Certificate, is used by employees to designate how much of their taxable income is to be withheld and remitted to the IRS as advance tax payments throughout the year. To help you with calculating your tax withholdings, the IRS provides a Tax Withholding Estimator.

Please note that the IRS Form W-4 does go through updates and changes. The GSA Payroll monitors and updates its payroll system to comply with these changes. Refer to the IRS website to download the latest form and research your questions when making and submitting your changes.

You can update your federal income tax withholdings one of two ways:

1. Sign into Employee Express and click on “Federal Tax” on the left side of the main menu.
2. Go to the IRS website, download IRS Form W-4, complete the form, sign it, and send to the GSA Payroll via email at KC-Payroll.Finance@gsa.gov, fax at 816-823-5435, or postal mail at GSA Payroll (BGC) 2300 Main Street 2NW Kansas City, MO 64108.

Use IRS Form W-4 if you want to tell us not to withhold any federal income tax

You may claim exemption from federal tax withholding for 2025 if you meet both of the following conditions: You have no federal income tax liability in 2024 and you expect to have no federal income tax liability in 2025. You had no federal income tax liability in 2024 if either of these is true:

1. Your total tax on line 24 on your 2024 Form 1040 or 1040-SR is zero (or less than line 32).
2. You were not required to file a return because your income was below the filing threshold for your correct filing status.

If you claim exemption, you will have no income tax withheld from your paycheck and may owe taxes and penalties when you file your 2025 tax return. You have two options to claim exempt from federal tax:

1. Using the Federal Tax (W-4) function on Employee Express, select the check box at the bottom of the next screen and certify the statements on the final tax “Exempt” screen.
2. To claim exemption from withholding, certify that you meet both of the conditions above by writing “Exempt” on Form W-4 in the space below Step 4(c). Then, complete Steps 1(a), 1(b), and 5. Do not complete any other steps. You will need to submit a new Form W-4 by Feb. 18, 2025.

Please note that effective Feb. 15, 2025, your prior year IRS Form W-4 (2024) filing “Exempt” status expires. If GSA Payroll has not received an IRS Form W-4 for the 2025 tax year by Feb. 18, 2025, we will begin withholding federal income tax under the “single/no exemption” formula as of PPE March 8, 2025. There are no refunds of tax withholdings if the IRS Form W-4 claiming “Exempt” status is submitted late.

Updates to 2024 Wage and Tax Statement, IRS Form W-2

We will issue the 2024 IRS Form W-2, Wage and Tax Statement through Employee Express. If you received your 2023 IRS Form W-2 electronically or you registered to receive an electronic 2024 IRS Form W-2 before the close of business on Dec. 14, 2024, you will receive your 2024 IRS Form W-2 via EEX.

We will make the online 2024 IRS Form W-2 available to all employees on or before Jan. 31, 2025, through the EEX website. If you elect to receive your IRS Form W-2 in paper format, your IRS Form W-2 will be postmarked and mailed by Jan. 31, 2025.

Upon an employee’s separation, we will automatically set the indicator to have your W-2 mailed to your address on record with the Payroll Operations.

You should review your IRS Form W-2 closely for legibility, accuracy, and completeness. The instructional guide for reading the 2024 IRS Form W-2 is available may be found on the GSA Payroll website. You should compare the IRS Form W-2 with your final earnings and leave statement for PPE Dec. 14, 2024, to verify accuracy and completeness of the tax information included on the IRS Form W-2. Report any discrepancies to us by email to kc-payroll.finance@gsa.gov.

Federal, state, and local income tax changes

We updated the 2025 federal tax rate changes in the payroll system. The changes were reflected on your ELS in PPE Dec. 28, 2024. In addition, the following states and localities also have new payroll tax formulas.

Additional states have not published withholding rates for 2025. As these states publish new guidelines, we will send a message through EEX to notify employees.

TSP deferral limits

The IRS deferral limit for 2025 is $23,500. If you are turning 50 or are over the age of 50, you may contribute an additional $7,500  for a total of $31,000 in 2025. Under a change made in SECURE 2.0, a higher catch-up contribution limit applies for employees aged 60, 61, 62 and 63 who participate in these plans. For 2025, this higher catch-up contribution limit is $11,250 instead of $7,500. Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. Additional information regarding these rules can be found in IRS Notice 2024-80.

Supplemental wage withholding rate

Supplemental wages are non-regular wage payments to an employee. They include payments such as awards, overtime, severance pay, back pay, voluntary separation incentive payments, amended timecards and retroactive pay increases.

The federal income tax withholding rate for supplemental wages for 2025 will continue to be 22 percent (as in 2024). State and local taxes are applied as well.

Cancellation of Debt, IRS Form 1099-C

If a federal government agency, financial institution, or a credit union cancels or forgives a debt owed of $600 or more, an IRS Form 1099-C, Cancellation of Debt, will be provided to you.

Generally, you must include all canceled amounts, even if less than $600, on the “Other income” line of IRS Form 1040, U.S. Individual Income Tax Return. IRS Form 1099-C, will be mailed by Jan. 31, 2025.

If you have additional questions on preparing your individual tax return please consult with the IRS or your personal financial adviser.

Old-age, survivors, and disability insurance, and Medicare rates

The 2024 and 2025 wage base limits for these two programs are shown in the table below. In 2025, the Medicare tax rate is 1.45%. The OASDI tax rate is 6.2%. 

*Under a provision of the Affordable Care Act, the employee-paid portion of the Medicare tax is subject to the 0.9 percent additional Medicare tax on amounts over the statutory thresholds that are not inflation-adjusted and thus apply to more employees each year.

An individual is liable for additional Medicare tax if the individual’s wages, compensation, or self-employment income (together with that of his or her spouse, if filing a joint return) exceed the threshold amount for the individual’s filing status:

Flexible Savings Account

The IRS increased the Flexible Spending Account, FSAFEDS, Health Care employee contribution limit by $100, from $3,200 in 2024 to $3,300 for 2025.

The 2025 FSAFEDS Health Care carryover is $660. This is an increase of $20 from the 2024 carryover limit of $640.

Pre-tax Qualified Transportation Fringe Benefits Program

The IRS regulations allow employees to use pre-tax earnings to pay for the monthly cost of qualified vanpools, qualified parking expenses, or transit passes (where the agency does not provide a transit pass issued directly to their employees).

The IRS regulations (effective January 2025) authorize employees to claim up to $325 per month in qualified parking benefits. In addition, employees can also claim up to $325 per month for transportation in a commuter highway vehicle (a vehicle seating six or more passengers, not counting the driver). The $325 monthly benefit for a commuter highway vehicle, when combined with the Transit Fare Subsidy, cannot exceed the $325 per month limitation.

Reminder for all GSA employees already enrolled in the TEA-21 benefit program: if your monthly costs change or you no longer qualify for the pre-tax transportation benefit, complete GSA Form 3667 Application for Pretax Transportation Fringe Benefits (TEA-21) Program. If you are an employee of a GSA Payroll client agency use Optional Form 3667 to update or cancel your participation in the TEA-21 benefit program. Links to these forms can be found on the GSA website under the “Forms, Documents and Other Links” tab.

Once an employee completes the appropriate Form 3667, send the form to the GSA Payroll at:

KC-Payroll.Finance@gsa.gov
816-823-5435
GSA Payroll (BGC) 2300 Main Street 2NW Kansas City, MO 64108

Exceptions

Employees of the Railroad Retirement Board, RRB, should contact Patricia Hopkins at 312-751-4511, 708-943-8604, or patricia.hopkins@rrb.gov with questions specifically related to the RRB Pre-Tax Transit Benefits Program.

Employees of the Senate Restaurant Associates are not eligible for the Pre-tax Qualified Transportation Fringe Benefits Program through the GSA Payroll.

Combined Federal Campaign contributions

All employee 2025 CFC contributions will take effect in the PPE Jan. 25, 2025 (EFT pay date Jan. 31, 2025). Please verify your CFC withholding for this PPE by checking your ELS against your pledge receipt. The 2025 CFC pledges received for new employees will take effect in the first pay period after receipt.

Official worksite for location-based pay purposes

Certain location-based pay entitlements (such as locality payments, special rate supplements and non-foreign area cost-of-living allowances) are based on the location of the employee’s official worksite associated with the employee’s position of record. An agency must document an employee’s official worksite on the employee’s Notification of Personnel Action (Standard Form 50 or equivalent). See “Duty Station” blocks 38 and 39 of the Standard Form 50 showing the city/county and state in which the official worksite is located.

Your official worksite is generally the location where you regularly perform your duties. If your work involves recurring travel or your work location varies on a recurring basis, your official worksite is the location where the work activities of your position of record are based, as determined by your employing agency, subject to the requirement that your official worksite must be in a locality pay area where you regularly perform work.

Whenever you receive a notification of a HR personnel change, it is your responsibility to verify the accuracy of the change and report to your servicing HR office if you find an error. If you have any questions about your duty station, please contact your servicing HR Office. If there is an error in your pay because of a change in your official duty station and you are overpaid, you will be required to pay back any overpayments received as a debt to the government.

Within-grade pay increases

Within-grade increases, or WGI, are pay increases received by federal employees after they have served a specific amount of time at a certain grade level and demonstrated at least an acceptable level of performance.

A WGI is effective on the first day of the first pay period beginning on or after the completion of the required waiting period. You can calculate your next WGI by finding the effective date on the SF-50, Notification of Personnel Action for your last WGI and using the chart below.

Whenever you have a personnel change, it is your responsibility to verify the accuracy of the change and report to your servicing HR office and supervisor if you find an error. If you have any questions about your WGI date, please contact your servicing HR office. If there is an error in your WGI effective date and you are overpaid, you will be required to pay back any overpayments received as a debt to the government.

Allowances for employees relocated to or temporarily deployed in foreign areas

The Department of State Standardized Regulations governs employee allowances and benefits available to the U.S. Government civilians assigned to foreign areas. If you are an employee who is assigned to a foreign area, you should check both the DSSR and your agency’s implementing policies for guidance on a specific allowance. The DSSR and other information of foreign allowances may be found on the State Department’s website.

GSA employees may refer to HRM 9592.1A GSA Policy on Allowances and Differentials Payable in Foreign Areas.

GSA Voluntary Leave Transfer Program

The GSA VLTP allows employees to donate annual leave to employees who are experiencing (or whose family member is experiencing) a medical emergency. Your donation may not exceed the lesser of:

• One-half of the annual leave the donor would be entitled to accrue during the leave year in which the donation is made. For example, if you are in the 8-hour leave category no more than 104 hours could be donated or,
• If the employee is projected to otherwise forfeit “use-or-lose” leave at the end of the year, the number of hours remaining in the leave year of the donation for which the employee is scheduled to work and receive pay.

Approved donated leave recipients should contact their timekeeper or supervisor if you have questions on your donated leave balance. Also, remember it is your responsibility to review your ELS and work with your timekeeper and supervisor to ensure that the correct amount of donated leave is charged to your time and attendance records. For more information on the GSA Voluntary Leave Transfer Program visit the VLTP website.

Employment and income verification

Our Office of the Chief Financial Officer, OCFO, partners with The Work Number®, or TWN, from Equifax to provide automated income and employment verifications. Visit our TWN page for further information about this program.

Employee Express Earnings and Leave Statement

GSA and client agency employees can view their ELS electronically through the Office of Personnel Management’s Employee Express website. Employee Express provides timely access to your pay and leave data as early as the Thursday afternoon following the end of the pay period. You have online access to current pay period, prior pay period and year-to-date pay and leave data, and topical information regarding payroll issues.

Employee Express also allows you to view and change the following payroll information (for personnel changes use HR Links employee self-service area):

• Combined Federal Campaign
• Direct deposit
• Financial allotments
• Federal and state tax withholdings
• Health savings allotment
• W-2 hard copy on/off
• 1095-C hard copy on/off
• History personnel/payroll actions
• W-2 Forms
• 1095-C Forms

Employee Express 12-month lock out due to inactivity

The Office of Personnel Management’s Employee Express application has security procedures that will lock all EEX user accounts that have been inactive for 12 months.

What do I need to do?

Be sure to log into Employee Express at least every 12 months to ensure your account remains active. You can enter a personal email address, if you prefer, to allow you to receive inactivity notifications without access to your GSA email account.

What happens if my account becomes locked?

If your account becomes locked, click the “Submit Help Request” button on the EEX homepage to contact the EEX Help Desk. In the help request form, include a short message (such as “EEX account locked”) in the comments section to expedite the process.

EEX technical assistance

If you need technical assistance, contact the EEX Help Desk by clicking “Submit Help Request” on the EEX website, and complete the request form. Questions concerning specific personnel information should be directed to your servicing HR Office.

For payroll information, contact the GSA Payroll Customer Service Center at:

KC-Payroll.Finance@gsa.gov
844-303-6515
816-823-5435
GSA Payroll (BGC) 2300 Main Street 2NW Kansas City, MO 64108

Pay periods

There are 26 pay periods in 2025 and a copy of this payroll calendar and the following additional information may be of interest:

• The first pay period in 2025 is PPE Dec. 28, 2024, and the last pay period is PPE Dec. 13, 2025.
• The last EFT pay date is Dec. 19, 2025. The last “Official” pay date will be on Dec. 24, 2025.
• The leave year-end date is Jan. 10, 2026.
• Employees earning six hours of annual leave will earn 10 hours in PPE Dec. 27, 2025.

Federal holidays

The calendar year 2025 federal holidays are found on the OPM website.

Contact information

If you have payroll questions or concerns contact us at:

KC-Payroll.Finance@gsa.gov
844-303-6515
816-823-5435
GSA Payroll (BGC) 2300 Main Street 2NW Kansas City, MO 64108