While significant tax increases may have been averted through the latest tax legislation, there was no extension of the payroll tax holiday. As a result, employers will now be responsible for withholding 6.2% (rather than the reduced 4.2% withholding rate) from an employee’s taxable compensation for social security taxes. Employers should take note that the withholding tax is capped so that the first $113,700 of wages is subject to the tax. Wages in excess of the cap will not be subject to the 6.2% social security withholding.
If you have questions regarding the payroll tax hike, please contact your LaPorte Accounting Services or Tax professional.