As we move further into 2025, it’s crucial for nonprofit organizations to stay ahead of the curve with the latest payroll and tax updates. From changes in tax withholding limits to new state sales tax rates, these updates can have a significant impact on your operations and mission-driven initiatives. In this article we give a few key reminders and updates that matter most for your organization. Whether you’re preparing for new payroll software requirements or adjusting to federal and state policy changes, this overview helps ensure you have the tools and knowledge needed to navigate the year successfully.
REMINDERS
Payroll Software Updates:
Always check for payroll updates before running quarterly payroll reports to ensure compliance with the latest regulations.
2025 SUTA Rate:
For Louisiana entities, log into your LaWorks.net account to access your updated 2025 SUTA rate and update it in your payroll software.
WHAT’S NEW IN 2025
1. Tax Withholding and FICA Rate/Limit Effective January 1, 2025:
The Social Security tax rate remains at 6.2%, applied to the first $176,100 of wages (increased from $168,600 in 2024).
Medicare tax of 1.45% applies to all wages. Additionally, a 0.9% Medicare tax applies to wages exceeding $200,000 annually. Employers must withhold this additional tax but are not required to match it.
Employers continue to match employees’ Social Security (6.2%) and Medicare (1.45%) taxes. For detailed information, visit the Social Security Administration’s website: https://www.ssa.gov/news/press/factsheets/colafacts2025.pdf.
2. Louisiana State Sales Tax:
Effective January 1, 2025, the Louisiana state sales tax rate increases to 5% (up from 4.45%). This rate will remain in effect until 2030, when it will decrease to 4.75%.
3. U.S. Department of Labor Overtime Rule:
As of November 15, 2024, the U.S. District Court for the Eastern District of Texas vacated the Department’s 2024 final rule. Consequently, the 2019 rule remains in effect, with a minimum salary level of $684 per week and an annual compensation threshold of $107,432 for highly compensated employees.
Pending lawsuits may lead to additional updates. For ongoing developments, visit the Department of Labor’s website: https://www.dol.gov/agencies/whd/overtime/rulemaking.
4. Standard Auto Mileage Rate:
Effective January 1, 2025, the IRS standard mileage rate for business use is $0.70 per mile. Refer to IRS Notice 2025-5 for more details.
5. Revised W-4 Form for 2025:
The IRS released a revised W-4 form for 2025. Only new employees and current employees making changes to their federal withholding are required to complete the updated form.
Access the revised W-4 and instructions here: Form W-4: https://www.irs.gov/pub/irs-pdf/fw4.pdf Instructions: https://www.irs.gov/forms-pubs/about-form-w-4
Stay Informed
Keeping up-to-date with these changes is crucial for compliance and smooth entity operations.