Payroll Taxes: Rates and Changes
Find out the latest on payroll tax rates and changes and how they may affect your business so you can maintain compliance.
2018 Pension Plan AdjustmentsUpdated 10/20/17
- The limited compensation amount under a defined benefit plan is $220,000.
- The compensation limit for defined-contribution plans is $55,000.
- The contribution limit for employees who participate in 401(k), 403(b), and most 457 plans and the federal government’s Thrift Savings Plan is $18,500.
- The annual compensation limit for qualified plans is $275,000.
- The salary threshold used in the definition of a “key employee” in a top-heavy plan is $175,000.
- The salary threshold used in the general definition of a highly compensated employee is $120,000.
- The dollar limitation for employees 50 and older who participate in an employer plan other than a 401(k) or 408(p) SIMPLE is $6,000. The dollar limitation for employees 50 and older who participate in 401(k) or 408(p) SIMPLE is $3,000.
- The annual compensation limit for eligible participants in certain governmental plans is $405,000.
- The compensation amount regarding simple employee pensions (SEPSs) is $600.
- The limitation for SIMPLE retirement accounts is $12,500.
- The limitation concerning the qualified gratuitous transfer of qualified employer securities to an employee stock ownership plan is $50,000.
- The definition of a control employee for fringe-benefit valuation purposes is $110,000.
- The dollar limitation on premiums paid for a qualifying longevity annuity contract is $130,000.
- The adjusted gross income limitation for determining the retirement savings contributions credit for married taxpayers filing a joint return is $38,000.
- The adjusted gross income limitation for determining the retirement savings contributions credit for taxpayers filing as head of household is $28,500.
- The adjusted gross income limitation for determining the retirement savings contributions credit for all other taxpayers is $19,000.
- The limit on annual contributions to an individual retirement arrangement is $5,500.
- The applicable dollar amount for determining the deductible amount of an IRA contribution for taxpayers who are active participants filing a joint return or as a qualifying widow(er) is 101,000. The applicable dollar amount for all other taxpayers who are active participants (other than married taxpayers filing separate returns) is $63,000. If an individual or the individual’s spouse is an active participant, the applicable dollar amount for a married individual filing a separate return is not subject to an annual cost-of-living adjustment and remains $0. The applicable dollar amount for a taxpayer who is not an active participant but whose spouse is an active participant is $189,000.
- The deduction for taxpayers making contributions to a traditional IRA is phased out for single individuals and heads of household who are active participants in a qualified plan (or another specified retirement plan) and have adjusted gross incomes between $63,000 and $73,000, is $72,000. For married couples filing jointly, if the spouse who makes the IRA contribution is an active participant, the income phase-out range is between $101,000 and $121,000. For an IRA contributor who is not an active participant and is married to someone who is an active participant, the deduction is phased out if the couple’s income is between $189,000 and $199,000. For a married individual filing a separate return who is an active participant, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
- The adjusted gross income limitation for determining the maximum Roth IRA contribution for married taxpayers filing a joint return or for taxpayers filing as a qualifying widow(er) is $189,000. The adjusted gross income limitation for all other taxpayers (other than married taxpayers filing separate returns) is $120,000. The applicable dollar amount for a married individual filing a separate return is not subject to an annual cost-of-living adjustment and remains $0.
- The adjusted gross income phase-out range for taxpayers making contributions to a Roth IRA is $189,000 to $199,000 for married couples filing jointly. For singles and heads of household, the income phase-out range is $120,000 to $135,000. For a married individual filing a separate return, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
2018 Tax ProvisionsUpdated 3/14/2018
- Adoption Credit: The adoption tax credit is $13,810.
- Cafeteria Plans: The dollar limitation on voluntary employee salary reductions for contributions to health flexible spending arrangements is $2,650.
- Qualified Transportation Fringe Benefit: The monthly limitation for the qualified transportation fringe benefit and for qualified parking is $260.
- Personal Exemption: The personal exemption is $4,150.
- Standard Deductions: The standard deduction for heads of household is $9,550, $6,500 for singles and married couples filing separate returns, and $13,000 for married couples filing jointly.
- Foreign Earned Income Exclusion: The foreign earned income exclusion amount is $103,900.
- Medical Savings Accounts: The annual deductible for self-only coverage in a medical savings account increases to not less than $2,300, but not more than $3,450. The maximum out-of-pocket expense amount for self-only coverage is $4,600. The annual deductible for family coverage in a medical savings account is $4,600; the deductible cannot be more than $6,850. The out-of-pocket expense limit remains $8,400.
- Requirement to Maintain Minimum Essential Coverage: The applicable dollar amount for failure to maintain minimum essential coverage is $695.
- Qualified Small Employer Health Reimbursement Arrangement: To qualify, the total amount of the payments and reimbursements for any year cannot exceed $5,050 ($10,250 for family coverage).
FICA Rate and Wage BasesUpdated 10/20/2017
- The Social Security wage base for 2018 is $128,700.
- 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, and $125,000 for married couples filing separately.
- There is a 2 percent cost-of-living adjustment for 2018, affecting several thresholds for benefits and coverage.
FUTA Credit ReductionsUpdated 11/14/17
- California – 2.1% FUTA credit reduction.
- U.S. Virgin Islands – 2.1% FUTA credit reduction.
2018 SUTA Wage BasesUpdated 3/14/2018
- Alaska: $39,800 to $39,500
- Arkansas: $12,000 to 10,000
- Colorado: $12,500 to $12,600
- Delaware: $18,500 to 16,500
- Hawaii: $44,000 to $45,900
- Idaho: $37,800 to $38,200
- Iowa: $29,300 to $29,900
- Missouri: $13,000 to $12,500
- Montana: $31,400 to $32,000
- Nevada: $29,500 to $30,500
- New Jersey: $33,500 to $33,700
- New York: $10,900 to $11,100
- New Mexico: $24,300 to $24,200
- North Carolina: $23,100 to $23,500
- North Dakota: $35,100 to $35,500
- Ohio: $9,000 to $9,500
- Oklahoma: $17,700 to $17,600
- Oregon: $38,400 to $39,300
- Pennsylvania: $9,750 to $10,000
- Rhode Island: $22,400 to $23,000
- Tennessee: $8,000 to $7,000
- Utah: $33,100 to $34,300
- Vermont: $17,300 to $17,600
- Virgin Islands: $23,500 to $24,200
- Washington: $45,000 to $47,300
- Wyoming: $25,400 to $24,700
2018 Tax Brackets
Tax Brackets and Rates
|Rate||For Unmarried Individuals, Taxable Income Over||For Married Individuals Filing Joint Returns, Taxable Income Over||For Heads of Households, Taxable Income Over|
The personal exemption for 2018 is eliminated.
|Filing Status||Deduction Amount|
|Married Filing Jointly||$24,000|
|Head of Household||$18,000|
Alternative Minimum Tax Exemptions
|Filing Status||Exemption Amount|
|Married Filing Jointly||$109,400|
Alternative Minimum Tax Exemption Phaseout Thresholds
|Married Filing Jointly||$1,000,000|
Earned Income Tax Credit
|Filing Status||No Children||One Child||Two Children||Three or More Children|
|Single or Head of Household||Income at Max Credit||$6,800||$10,200||$14,320||$14,320|
|Phaseout Ends (Credit Equals Zero)||$15,310||$40,402||$45,898||$49,298|
|Married Filing Jointly||Income at Max Credit||$6,800||$10,200||$14,320||$14,320|
|Maximum Credit||$520 ||$3,468||$5,728||$6,444|
|Phaseout Ends (Credit Equals Zero)||$21,000||$46,102||$51,598||$54,998|
For 2018, the amount of one withholding allowance on a annual basis is $4,150. The withholding allowance amounts by payroll period are:
- Weekly: $79.80
- Biweekly: $159.60
- Semimonthly: $172.90
- Monthly: $345.80
- Quarterly: $1,037.50
- Semiannually: $2,075.00
- Daily or miscellaneous (each day of payroll period): $16
How APS Can Help
APS’s payroll tax compliance experts handle all of paperwork and filings for payroll taxes, keeping you in compliance:
- Preparation of your quarterly tax payments and filings.
- System update of federal tax tables each year.
- Year-end payroll processing assistance.
The information on this page is subject to change at any time based on tax regulation updates. To stay current on payroll processing issues and payroll tax news, subscribe to the APS Blog.