Congress recently passed legislation designed to prevent the fiscal cliff. Although some individuals anticipate additional changes, it is important for your firm to understand the immediate effects on your payroll based on the current decision.
- Employers have been instructed to continue withholding federal income tax using the 2012 tax tables.
- The 2013 Social Security Wage Base has increased from $110,100 to $113,700.
- An extra 0.9% Medicare tax must be withheld on wages paid in excess of $200,000.
- The 2% Social Security tax cut for employees expired on 12/31/12. Effective with all 2013 paid wages, employers must begin withholding Social Security tax at the previous rate of 6.2%. This will result in a decrease to net pay for your employees.
Kelly A. O’Leary, CPA, CGMA, MBA, CITP
Vice President, Finance and Administration