2012 Payroll Tax and Mileage rate changes

2012 Payroll Tax and Mileage rate changes

Social Security Rate and Wage Base

The Social Security Old Age Survivors and Disability Insurance (OASDI) taxable wage base for 2012 increases to $110,100 from $106,800. The rate for the employee portion of Social Security is 4.2% for the first two months of 2012 as a result of ongoing payroll tax relief signed into law on December 23.

Retirement and Pension Plans – 401(k), 403(b) & 457(e) Type Plans

The 2012 limit on the exclusion for elective deferrals in Section 401(k)-type plans, Sec. 403(b) plans, and Sec. 457(e) (15) plan will be $17,000, up from $16,500 in 2011. The catch-up contribution limit for those aged 50 and over remains unchanged at $5,500.

Federal Unemployment Tax Act (FUTA) Rate and Wage Base

The FUTA wage base is staying at the $7,000 for 2012 and the rate is staying at the 6.0% with the credit of 5.4% for a net tax rate of .6%.

Mileage Rates

The 2012 business deduction mileage rate remains 55.5 cents for business miles driven, the same as the adjusted mid-year rate, the Internal Revenue Service said December 9th. Starting January 1, 2012, the rate for medical or moving expenses and deductions will be 23 cents and the rate for miles driven in service of charities will be 14 cents per mile.