Support : Payroll Tax Info : Federal Tax Changes
The following information regarding Federal payroll tax changes is effective January 1, 2012. For the 2012 calendar year, these changes include the following:
WARNING! Concerning 2012 Federal tax tables, Congress has temporarily extended the 2011 payroll tax cut, but is still debating over possible changes to the 2012 tax rates. The values posted on this site are based on the Early Release copy of the Notice 1036 including the payroll tax cut extended as of December 23, 2011.
Increase in the Federal Withholding Allowance for 2012
Withholding allowances for self and dependents increases to $3,800. Verify that the "ANNUAL EXEMPTIONS - SELF" and "DEPENDENTS" fields of the "US" (federal) record of the Tax Data File is set to 3800.00. (Reference: Department of the Treasury, Internal Revenue Service, Notice 1036, Rev December 2011.)
FICA/Disability Employee Tax Rate temporarily remains the same for 2012
The FICA/Disability Employee rate remains at 5.65%. Verify the "FICA/DISABILITY" field of the "US" (federal) record of the Tax Data File is set to 0.05650 for the EMPLOYEE TAX RATE. (Reference: Department of the Treasury, Internal Revenue Service, Notice 1036, Rev December 2011.)
Increase in the Social Security Wage Limit for 2012
The Social Security tax rate remains at 6.2% for employers, but the wage limit increases to $110,100 for wages paid in 2012. Change the "FICA/DISABILITY - Employee Tax Rate" field of the "US" (federal) record of the Tax Data File to 110100.00 for the EMPLOYEE TAX WAGE LIMIT.(Reference: Notice 1036.)
No Change to the Medicare Tax Rate for 2012
The Medicare tax rate remains at 1.45% on all wages, for both employers and employees. There is no wage base limit for the Medicare tax. Keep the amount of the field "MEDI LIMIT" of the Custom screen (option U) of the "US" (federal) record at 9999999 (seven 9's). (Reference: Notice 1036.)
Advance Payment of Earned Income Credit (EIC) Expires
The option of receiving advance payroll payments of EIC expired December 31, 2011. Individuals who received advance payments of EIC in 2011 must file a 2011 federal income tax return. Individuals eligible for EIC in 2012 can still claim the credit when they file their 2012 federal income tax return.
New Federal Withholding Tables
Sample screens with the new withholding rates follow this notice. These changes should be made to the "US" (Federal) record of the Tax Parameter File. You must access the Single, Married, and Head of Household) screens individually.
(Note that for the Federal tables, the values for Single and Head of Household are the same.)
