Update: Payroll Tax Provisions
The American Taxpayer Relief Act of 2012 was approved January 1, 2013, detailing a plan to avoid the many tax increases and spending cuts known as the “fiscal cliff.” However, payroll taxes are still set to go up: the employee social security rate will increase from 4.2% to 6.2%. As communicated on December 21, 2012, the Paycor system has been updated to reflect the increased employee social security rate.
The plan also includes the following provisions:
* Raising taxes on individuals earning more than $400,000 and couples earning more than $450,000, from 35% to 39.6%
**** Individuals earning less than $400,000 and couples earning less than $450,000 will not see a change to their income tax rate, but they will see minor withholding changes due to the change in the personal exemption allowance
* Extending employer-provided transportation and parking for another year
* Extending unemployment insurance for 2 million people for another year
Click here to view the full House bill establishing this plan.
We will be watching closely for the release of new withholding tables or any new updates, and will keep you informed as new information becomes available.
_Sources: The American Taxpayer Relief Act of 2012 (H.R. 8), CNN