With the start of a new tax year approaching, payroll departments need to prepare for changes to several key payroll tax-related amounts. Below is a list of payroll tax changes taking effect in 2012.
Congress is debating changes to payroll taxes. To receive updates and analysis of changes coming out of Washington, subscribe to the APS Payroll Blog.
Social Security Rate and Wage Base
- The Social Security Old Age Survivor’s and Disability Insurance (OASDI) taxable wage base for 2012 increases to $110,100 from $106,800*.
- The rate for the employee portion of Social Security is 4.2% for the first two months of 2012 as a result of legislation (H.R. 3765) signed on December 23.
*Contribution and Benefit Base. (n.d.) Retrieved December 13, 2011, from http://www.ssa.gov/oact/cola/cbb.html
Retirement and Pension Plans – 401(k), 403(b) & 457(e) Type Plans
- The 2012 limit on the exclusion for elective deferrals in Section 401(k)-type plans, Sec. 403(b) plans, and Sec. 457(e)(15) plan will be $17,000, up from $16,500 in 2011.
- The catch-up contribution limit for those aged 50 and over remains unchanged at $5,500.
Many other pension plan limit amounts also will increase. To view the list in its entirety, visit the Internal Revenue Service website for announcement IR-2011-103.
Mileage Rates
- The 2012 business mileage rate remains 55.5 cents for business miles driven, the same as the adjusted mid-year rate, the Internal Revenue Service said December 9th.
- Starting January 1, 2012, the rate for medical or moving purposes will be 23 cents and the rate for miles driven in service of charitable organizations will be 14 cents per mile, IRS said (IR-2011-116).
FUTA Rate and Wage Base
- The FUTA wage base is staying at the $7,000.00 for 2012 and the rate is staying at the 6.0% with the credit of 5.4% for a net tax rate of .6%.