2018 Tax Changes

2018 Tax Changes

  • The social security wage base limit has increased from $127,200 to $128,400. Based on this new amount, the maximum social security tax payable by each employee is $7,960.80, or 6.2% of the wage base.

  • Federal income withholding tax brackets have changed from 10, 15, 25, 28, 33, 35 and 39.6% to 10, 12, 22, 24, 32, 35, and 37%. Please see the following document for more information – Figuring Your Federal Taxes. This change will first impact biweekly-paid employees on the February 16, 2018 pay date and monthly employees on the February 28, 2018 pay date.

  • The annual withholding allowance amount has increased from $4,050 to $4,150.

  • The flat tax rate for withholding income tax from supplemental wages has changed from 25% to 22% and from 39.6% to 37% for supplemental wages over $1 million.

  • The 2018 Form W-4, Employee’s Withholding Allowance Certificate, was released on 2/28/18 and can be viewed at http://www.irs.gov/pub/irs-pdf/fw4.pdf.

  • An updated online calculator for use with the 2018 Form W-4 was also released on 2/28/18 and is located at http://www.irs.gov/individuals/irs-withholding-calculator. This withholding calculator may help employees ensure that an adequate amount of tax is withheld from paychecks each pay period.