Payroll Taxes: Rates and Changes
Following is a list of scheduled payroll tax rates and changes effective 2017. As additional payroll tax rates and changes are released, we will update this information.
It is important to be familiar with changes in payroll taxes each year to accurately process payroll.
2017 Limitations and Benefits
- The elective deferral, or contribution, limit for employees who participate in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan is $18,000.
- The catch-up contribution limit for employees 50 and older who participate in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan is $6,000.
- The limit on annual contributions to an individual retirement arrangement is $5,500.
- The additional catch-up contribution limit to an individual retirement arrangement for individuals 50 and older is $1,000.
- The limit for defined-contribution plans is $54,000.
- The salary threshold used in the general definition of a highly compensated employee is $120,000.
- The salary threshold used in the definition of a key employee in a top-heavy plan is $175,000.
- The annual compensation limit is $270,000.
- The definition of a control employee for fringe-benefit valuation purposes is $105,000. The limited compensation amount is $215,000.
- The maximum amount that can be excluded from an employee’s gross income for amounts paid or expenses incurred by an employer for qualified adoption expenses furnished pursuant to an adoption assistance program for other adoptions by an employee is $13,570.
- The foreign earned income exclusion amount is $102,100.
- The monthly tax-free amount of employer subsidy for qualified transportation and qualified parking fringe benefits is $255.
- The annual deductible for self-only coverage in a medical savings account increases to not less than $2,250, but not more than $3,350, up from $3,300. The maximum out-of-pocket expense amount for self-only coverage remains $4,500.
- The annual deductible for family coverage in a medical savings account remains $4,500; the deductible cannot be more than $6,750. The out-of-pocket expense limit remains $8,250.
- The standard deduction for heads of household is $9,350, $6,350 for singles and married couples filing separate returns, and $12,700 for married couples filing jointly.
- For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $186,000 and $196,000.
- The deduction for taxpayers making contributions to a traditional IRA is phased out for those who have modified adjusted gross incomes (AGI) within a certain range. For singles and heads of household who are covered by a workplace retirement plan, the income phase-out range is $62,000 to $72,000. For married couples filing jointly, in which the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phase-out range remains unchanged at $99,000 to $119,000. For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
- The income phase-out range for taxpayers making contributions to a Roth IRA is $184,000 to $194,000 for married couples filing jointly. For singles and heads of household, the income phase-out range is $118,000 to $133,000.
- The income limit for the saver’s credit (also known as the retirement savings contribution credit) for low- and moderate-income workers is $62,000 for married couples filing jointly, $46,500 for heads of household, and $31,000 for married individuals filing separately and for singles.
- The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
FUTA Credit Reductions
- California – 1.8% FUTA credit reduction.
- U.S. Virgin Islands – 1.8% FUTA credit reduction.
FICA Rate and Wage Bases
- The Social Security wage base for 2017 is $127,200.
- The FICA contribution rate is 6.2%.
- For the Medicare (HI) portion of the FICA taxes, there is no wage base and all wages earned are subject to the HI tax, which is also paid by employers and employees. Each pays at a 1.45 percent rate, although employees pay an additional 0.9 percent on wages greater than $200,000 for individuals ($250,000 for married couples filing jointly).
- There is a 0.3 percent cost-of-living increase for 2017, affecting several thresholds for benefits and coverage.
SUTA Wage Bases
- Colorado: $12,200 to $12,500
- Montana: $30,500 to $31,400
- Oklahoma: $17,500 to $17,700
- Vermont: $16,800 to $17,300
How APS Can Help
APS was one of the first payroll providers approved to file 94x returns on the new modernized e-file program with the IRS. This means that the APS unified cloud solution can provide correct data in the proper format for processing by IRS systems. APS guarantees tax payments and filings to be accurate and on time and takes the burden off your company for payroll tax liabilities and compliance*.
IRS Announces 2017 Pension Plan Limitations; 401(k) Contribution Limit Remains Unchanged at $18,000 for 2017
In 2017, Some Tax Benefits Increase Slightly Due to Inflation Adjustments, Others Are Unchanged
Department of Labor UI Statistics Page
DOL Comparison of State Unemployment Laws
*APS guarantees tax payments and filings to be accurate and on time, as long as the data provided to APS is accurate and timely and the customer’s account is sufficiently funded to cover all payroll tax liabilities. If a tax penalty is the result of our error, we’ll maintain the abatement process and absorb any fines or interest due.