Payroll Tax Deduction Rates Will Rise in 2018

Oct 24 2017 - Compensation - Gail Cecchettini Whaley

You must make certain tax deductions from employee paychecks.

You must make certain tax deductions from employee paychecks.

For 2018, the Social Security Administration announced that the Social Security taxable wage base will rise by $1,500 — from $127,200 to $128,700 maximum taxable earnings.

The Social Security withholding rate is unchanged for 2018 and remains at 6.2 percent, up to the maximum taxable amount. The Federal Insurance Contributions Act (FICA) tax rate – which is the combined total of the Social Security tax rate and the 1.45 percent Medicare tax rate — also remains unchanged at 7.65 percent.

Individuals with earned income of more than $200,000 ($250,000 for married couples filing jointly) pay an additional 0.9 percent in Medicare taxes.

There is no limit on the amount of wages subject to the Medicare tax.

Gail Cecchettini Whaley, CalChamber Employment Law Counsel/Content

HRCalifornia members can visit the Standard Deductions: Taxes in the HR Library for more information. Not a member? See how CalChamber can help you.

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