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PAYDAY Workforce Solutions Blog

What Will Effect Your Take Home Pay In 2012

On Jan 15, 2012

Payroll Tax Changes that will affect the Taxes Paid and Take-Home Pay in 2012

 

There are several important changes to taxes and related limits that will affect many employees and employers in 2012. 

 Every year, the IRS determines the annual Cost of Living Adjustments (COLA) and issues a statement including the new amounts for the following year.  For 2012, these adjustments are based on cost of living index numbers for the period of October 1, 2010 through September 30, 2011. 

 A number of annual limits, such as the 401(k) maximum annual deferrals and HSA contribution limits are subject to cost of living escalators.  Other amounts are determined by the Federal and State Government legislature.

 Commonly used limits are presented below.

Retirement Contributions:

  • 401(k) Maximum Employee Contribution has increased from $16,500.00 to $17,000.00
  • 403B Maximum Employee Contribution has increased from $16,500.00 to $17,000.00

 FICA (2012 Employee Wages Subject to FICA Withholding):

  • Maximum Taxable Earnings has increased from $106,800.00 to $110,100.00.
  • Maximum contribution has increased $204.60 to a maximum of $6,826.20.

Health Savings Accounts (HSA):

  • Individual Maximum Contribution (Includes Employer Contribution) has increased $50.00 to a maximum of $3,100.00.
  • Family Maximum Contribution (Includes Employer Contribution) has increased $100.00 to a maximum of $6,250.00.

CA State Disability Insurance (SDI):

  • Maximum 2012 Wages Subject for SDI Withholding has increased $2,269.00 to a wage limit of $95,585.00.
  • 2012 Employee Withholding Percentage will be 1.0% for SDI (down .2% from 2011).
  • 2012 Maximum Employee Deduction will be $955.85 for SDI (down $163.94 from 2011).

Please note that this is not a full list of all changes to benefit limitations and tax changes.  However, if you have contracted with a payroll service, they should be handling the limitations and percentage changes on your behalf.

For more information on the 2012 COLA Increases for Dollar Limitations on Benefits and Contributions, as well as access to a full table of all Cost of Living Adjustments, please visit http://www.irs.gov/retirement/article/0,,id=96461,00.html

 For more information on the 2012 California tax rates and withholding schedules, please visit http://www.edd.ca.gov/payroll_taxes/rates_and_withholding.htm

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