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Tax Rate Information

Changes for 2014

Payroll Tax Rate

The Social Security Administration (SSA) has announced that the 2014 social security wage base will be $117,000, an increase of $3,300 from the 2013 wage base of $113,700. However, the FICA tax rate will be changed to 6.2% for the employee portion to match with the employer portion. There is no limit to wages subject to the Medicare Tax; therefore, all covered wages are still subject to the 1.45% until an employee reaches $200,000 an additional .9% to the employee Medicare Tax will be withhold for the employee portion only.  The maximum social security tax that employees and employers will each pay in 2014 is $7,254.00. This is an increase of $204.60 from the 2013 maximum tax of $7,049.40.

California State Disability Tax

For 2014 the State Disability Insurance (SDI) taxable wage limit will be $101,636.00, an increase of $756.00 from the 2013 wage base of $100,880.00. The employee contribution rate will remain the same at 1.00% on annual earnings up to the wage base. The maximum tax withhold for California State Disability is $1,016.36.

Changes for 2013

Payroll Tax Rate

The Social Security Administration (SSA) has announced that the 2013 social security wage base will be $113,700, an increase of $3,600 from the 2012 wage base of $110,100. However, the FICA tax rate will be changed to 6.2% for the employee portion to match with the employer portion. As in prior years, there is no limit to wages subject to the Medicare Tax; therefore, all covered wages are still subject to the 1.45% tax.

The FICA tax rate, which is the combined social security tax rate of 6.2% and the Medicare tax rate of 1.45%, will change to 7.65% for 2013. The maximum social security tax that employees and employers will each pay in 2013 is $7,049.40. This is an increase of $2,425.20 from the 2012 maximum tax of $4,624.20.

California State Disability Tax

For 2013 the State Disability Insurance (SDI) taxable wage limit will be $100,880.00, an increase of $5,295.00 from the 2012 wage base of $95,585.00. The employee contribution rate will remain the same at 1.00% on annual earnings up to the wage base. The maximum tax withhold for California State Disability is $1,008.80.

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Changes for 2012

Payroll Tax Rate

The Social Security Administration (SSA) has announced that the 2012 social security wage base will be $110,100, an increase of $3,300 from the 2011 wage base of $106,800. However, the FICA tax rate will be 4.2% through February 2012 and then it will be changed to 6.2% for the employee portion to match with the employer portion. As in prior years, there is no limit to wages subject to the Medicare Tax; therefore, all covered wages are still subject to the 1.45% tax. The FICA tax rate, which is the combined social security tax rate of 4.2% and the Medicare tax rate of 1.45%, will be 5.65% for January and February 2012. In March 2012 6.2% and the Medicare tax rate of 1.45%, will change to 7.65% for 2012. The maximum social security tax that employees and employers will each pay in 2012 is $6,826.20. This is an increase of $2,340.60 from the 2011 maximum tax of $4,485.60.

NOTE: Special Recapture Provision
Under the terms negotiated by Congress, the law includes a new recapture provision in the event that the rate cut is not extended for the full year. This applies only to employees who receive more than $18,350 in wages during the two-month period, or 2/12 of the annual wage base of $110,100.
The recapture tax would be payable in 2013 by the employee when filing an individual tax return for the 2012 tax year.
IRS plans to issue additional guidance if needed to implement the provisions of the two-month extension, including revised employment tax forms and instructions, and information for employees who may be subject to the new recapture provision. For most employers, the quarterly employment tax return for the quarter ending March 31, 2012, is due April 30, 2012.
As part of the agreement that led to passage of the bill, Senate Majority Leader Harry Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.) named senators to a House-Senate conference committee to negotiate a package that would extend the payroll tax cut through 2012.
IRS officials said they plan to monitor negotiations in case future legislation changes the recapture provision.
Looking ahead to March 1, if Congress merely changes the rate to 6.2 percent from 4.2 percent and the wage base remains $110,100, a smooth transition would result for payroll professionals, Basehore said. Complications could arise, however, if lawmakers change the wage base, he said.

California State Disability Tax

For 2012 the State Disability Insurance (SDI) taxable wage limit will be $95,585, an increase of $2,269 from the 2011 wage base of $93,316. The employee contribution rate will reduce to 1.00% from 1.20% of annual earnings up to the wage base. The maximum tax withhold for California State Disability is $955.85.

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