2016 Tax Updates
|
TAXES |
2016 |
|
Federal |
|
|
Social Security Tax |
6.2% Limit $118,500 |
|
Medicare |
1.45% no limit |
|
Medicare Wages $200,000+ |
additional .09% no limit |
|
Supplemental Wage Rate |
25% |
|
Supplemental Wage Rate (Pay over $1 Million) |
39.60% |
|
California |
|
|
SDI |
.09% Limit $106,742 |
|
Supplemental Wage Rate [rate 10.23% for Bonuses] |
6.60% |
|
OTHER |
|
|
401(k) standard withholding limit |
$ 18,000.00 |
|
401(k) catch-up withholding limit [for employees 50 years and +] |
$ 6,000.00 |
|
FSA Contributions [flexible spending account] |
$ 2,550.00 |
|
Mileage reimbursement rate |
54 cents |
IRS Updates:
Retroactive increase in excludible transit benefits for 2015. The Consolidated Appropriations Act, 2016, increased the monthly transit benefit exclusion from $130 per participating employee to $250 per participating employee for the period of January 1, 2015, through December 31, 2015. Employers will be provided instructions on how to correct the social security and Medicare taxes on the excess transit benefits in future guidance. A link to that guidance will be provided at www.irs.gov/pub15b. Qualified parking exclusion and commuter transportation benefit. For 2016, the monthly exclusion for qualified parking is $255 and the monthly exclusion for commuter highway vehicle transportation and transit passes is $255. See Qualified Transportation Benefits in section 2.For high earners, therefore, the total Medicare tax rate will be 2.35%.
Work opportunity tax credit for qualified tax-exempt organizations hiring qualified veterans extended. The work opportunity tax credit is now available for eligible unemployed veterans who begin work after December 31, 2014, and before January 1, 2020. Qualified tax-exempt organizations that hire eligible unemployed veterans can claim the work opportunity tax credit against their payroll tax liability using Form 5884-C. For more information, visit IRS.gov and enter "work opportunity tax credit" in the search box.