January 11, 2013 STAFF

Payroll Tax Changes for 2013

To all John Carroll Employees:

On January 2, 2013, President Obama signed into law the American Taxpayer Relief Act of 2012 (ATRA). While this law includes a number of changes to tax laws affecting payroll and employment tax administration in 2013, the following change will have the most immediate impact on your net pay in 2013:

Employee Social Security Tax Rate Returns to 6.2%

The reduced 4.2% rate for employee Social Security taxes that was in effect for 2011 and 2012 has expired. The employee Social Security tax rate will return to 6.2% for 2013 wages up to the taxable wage limit of $113,700. Consequently, employees’ net pay under the taxable wage limit will decrease accordingly. The maximum Social Security tax that an employee would pay will be $7,049.40 for 2013. The Employer Social Security tax rate is unaffected, and remains 6.2% of Social Security taxable wages paid.

Employee Social Security Tax Rate

Employer Social Security Tax Rate

Social Security Taxable Wage Base Rate

Maximum Employee Social Security Tax Paid

2012

4.2%

6.2%

$110,100

$4,624.20

2013

6.2%

6.2%

$113,700

$7,049.40

To understand how other ATRA changes might affect you, please contact your accountant or financial advisor.