This practice directive explains how assessable payroll is determined, and aids in the interpretation of Assessment Manual Item: AP5-245-2.

For quick reference aids on assessable payroll, see Appendices A, B, and C.

Changes to the assessable payroll practice directive

Effective January 1, 2026, updates have been made to Appendix B and Appendix C of Assessment Practice Directive 5-245-2(A) — Assessable Payroll to limit which gratuities and tips are assessable and to clarify an exclusion for paid wage-loss benefits.

To learn more about the changes, visit Changes to the assessable payroll practice directive.