Employee Payroll Taxes are Set to Increase in 2013

Nov

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Employee Payroll Taxes are Set to Increase in 2013

Employee Payroll Taxes are Set to Increase in 2013. For 2011 and 2012, employees have received a break on their wage withholdings.  The Old-Age, Survivors, and Disability Insurance (OASDI) rate – previously 6.2% – was reduced to 4.2% for these two years.  In 2013 the rate is scheduled to go back to 6.2%.

The OASDI, also know as Social Security, is paid by both the employer and employee.  Employers have continued to pay the 6.2% rate over the last two years.  Self-employed individuals must pay both the employee and employer rate, for a combined tax of 10.4% in 2012 and 12.4% in 2013.

For 2012, the first $110,100 of an employee’s wages are subject to the 4.2% withholding rate.  In 2013, the first $113,700 of an employee’s wages will be subject to the 6.2% rate.