|January Paychecks Reflect New Tax Tables.|
|While the politicians may have taken their time deciding the tax rates for 2013, we just wanted to let you know that by Jan 4, 2013, Time & Pay’s systems were updated to account for the new tax rates for 2013 based on the policy passed in Washington on Jan 1.
Of course the big news is the cancellation of the 2% payroll tax cut that occurred in 2011 and was extended in 2012. Now that the election is over, as we predicted, that payroll tax cut was not extended. As a result, all individuals, no matter what tax bracket, will see a 2% increase in their social security taxes and thus a reduction in their take home pay. (The maximum taxable wage for social security in 2013 is $113,700.) If you have not already done so, employers may want to give their employees a heads-up regarding this reduction in net pay. If you would like a notice to post for employees, please visit our web site for a tax increase notice you can post for your employees.
As a result of the law passed Jan 1, income withholding tax for 99.5% of Americans will stay pretty much the same as rates stayed pretty much the same, except for those individuals who earn over $400,000 (single), $450,000 (married). For those high-income earners, a new tax bracket was enacted subjecting that additional income to a 39.6% income tax. If you would like to read more on this topic, visit our site here.
Also of note, there is an additional Obamacare/medicare tax of .9% for those individuals who earn $200,000 (single), $250,000 (married).
Bottom line, since Jan. 4, Time & Pay’s systems have been set up to accommodate all new tax rules and paychecks are being calculated accurately.