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Informational Update: "Fiscal Cliff" and New Federal Withholding Tables for 2013
On January 2, 2013, President Obama signed the American Taxpayer Relief Act of 2012(H.R. 8). The bill raises tax rates on income above $400,000 for individuals and $450,000 for couples.
In addition, the temporary Social Security payroll tax reduction that was in effect for tax years 2011 and 2012 has expired. For paychecks issued in 2013, the employee Social Security rate returns to 6.2%.
For information and guidance from the IRS on the 2013 withholding tables, including the Social Security rate change, visit the IRS website.
What This Means for Your Payroll
This notice is for your information only. If we prepare your payroll, or you have another paid service performing this task, there is no action you need to take at this time except to inform your employees that their pay will decrease by 2% (up to the first $113,600 of payroll)
The IRS has published the 2013 federal income tax withholding tables for wages paid in 2013. The are available at www.irs.gov.
If you use QuickBooks to prepare your payroll: Intuit Payroll incorporated the increased Social Security rate in Payroll Update 21301, which was released in mid-December. All paychecks created in 2013 will automatically apply the new rate.