January may be the last thing on your mind right now as you juggle end of month and end of year reports with office holiday parties, not to mention all the shopping and meal planning you need to do between now and New Year’s Eve. However, with just a few weeks to go before 2014, now is the time to tackle any updating of your systems needed to reflect changes to payroll taxes in the new year, as well as alert your employees to changes applicable to them. Below is a brief overview of the 2014 changes.
- As of January 1, 2014, the amount of an individual’s salary that is subject to Social Security payroll tax will change from $113,700 to $117,000. The Social Security Administration believes that out of the estimated 165 million workers in the United States who will pay Social Security payroll taxes next year, approximately 10 million will pay more taxes than they did in 2013 due to this change in policy. As a result of this change, the maximum yearly Social Security tax withholding, which remains at 6.2% of an individual’s taxable income, will shift from $7,049.40 to $7,254.
- A few state-specific regulations will also go into effect in 2014. In Arkansas, the lowest tax bracket is being reduced to 0.9% of the first $4,099 of net income earned. In Nevada, the taxable wage base for unemployment insurance contributions will increase from $26,900 to $27,400. In Washington, the wage base for unemployment insurance will change from $39,800, to $41,300. West Virginia is implementing a rule that taxpayers remitting a single business tax of $25,000 (down from $50,000) or more must file electronically. Connecticut is requiring all employers to submit quarterly wage reports electronically starting in 2014. Finally, minimum wage is increasing in California (from $8 to $9 as of July 1, 2014) and Rhode Island (from $7.75 to $8).