01 Mar Payroll tax rates for 2018
Percentages and Wage Limits
The Social Security (FICA) tax rate for the employee’s and employer’s share remains the same at 6.2%. The payroll limit will increase from $127,200 to $128,400. This equates to a maximum withholding per employee of $7,960.80 for 2018. A contribution rate of 12.4% of gross wages up to $128,400 is to be used to compute Federal deposits of FICA tax.
The Medicare tax rate remains the same at 1.45%. There is no payroll limit. A contribution rate of 2.9% of all gross wages is to be used to compute Federal deposits of Medicare Tax.
The Additional Medicare Withholding Tax remains the same at 0.9%. Individuals are subject to an additional 0.9% Medicare tax on their compensation above certain thresholds. Employers are responsible for withholding this 0.9% additional tax once an employee’s wages from the employer exceed $200,000 in a calendar year. There is no employer match on this tax.
The Federal Unemployment Insurance (FUTA) rate is currently set at a net rate of 2.7% for California, a credit reduction state. The payroll limit of $7,000 remains the same for 2018, which equates to a maximum tax of $189 per employee.
The California State Disability Insurance (SDI) rate will increase to 1.0%. The wage base increases to $114,967, which equates to a maximum withholding per employee of $1,149.67 for 2018.
California’s minimum wage increases from $10.50 to $11.00 per hour beginning January 1, 2018 for employers with 26 employees or more. For employers with 25 employees or less, the minimum wage increases from $10.00 per hour to $10.50 per hour on January 1, 2018. There are some exceptions to the minimum wage law, however, most employees in California fall under this requirement.
The City of Los Angeles’ minimum wage will increase from $12.00 to $13.25 per hour beginning July 1, 2018 for employers with 26 employees or more. For employers with 25 employees or less, the minimum wage will increase from $10.50 to $12.00 per hour beginning July 1, 2018. There are some exceptions to the minimum wage law, however, most employees who work in the City of Los Angeles fall under this requirement.
CALIFORNIA E-FILE AND E-PAY MANDATE
Effective January 1, 2017, employers with 10 or more employees were required to electronically submit employment tax returns, wage reports, and payroll tax deposits to the Employment Development Department (EDD). All remaining employers will be subject to this requirement beginning
January 1, 2018.
This mandate contains a waiver provision for employers who are unable to electronically submit employment tax returns, wage reports, and payroll tax deposits.
If you have any questions regarding the requirements for electronic filing, or any other payroll tax issues, please contact our office.