Payroll Tax Changes Effective This Month
The American Taxpayer Relief Act of 2012, passed by Congress on January 1, 2013, includes changes to general income tax rates and Social Security and Medicare tax rates and withholding rates. These changes will affect individuals’ income taxes and take-home pay.
All employees will see their Social Security payroll taxes rise 2 percent, because the temporary Social Security payroll tax reduction in effect in 2011 and 2012 was not extended. That reduction expired on January 1, 2013, meaning that the 4.2 percent workers paid toward Social Security in 2011 and 2012 has reverted to the original 6.2 percent tax rate.
Other payroll tax changes included in the American Taxpayer Relief Act of 2012 may affect some employees. These changes are:
• The maximum amount of earnings subject to the Social Security payroll tax increased to $113,700 from $110,100.
• Single taxpayers earning $400,000 a year or more and married couples earning $450,000 or more a year will pay 39.6 percent in income tax, up from 35 percent. Income-tax cuts have been extended for taxpayers earning under those amounts.
• Individuals who earn more than $200,000 will pay an additional 0.9 percent Medicare tax.
Oberlin has incorporated these withholding changes into BANNER, so employees will not need to take any action. However, Oberlin encourages employees to regularly review their withholding, especially when such life changes as births, marriage, divorce, and loss or addition of income occur. People who typically owe taxes or receive large refunds at the end of the year may also want to review their withholding. To change your withholding, fill out a new W-4, the form used to designate federal income tax withholding choices, and submit it to the Department of Human Resources. Revised W-4 forms may be submitted at any time during the year.
Address questions or concerns to Debbie Miller or Joe Chaney in the Office of Payroll and Benefits at x58430.