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2018 Payroll Changes

2018 Payroll Changes

Social Security Wage Base. The 2018 wage base will be $128,400. The employee and employer match will be 6.2%. The maximum deduction will be $7,960.80 ($128,400 x 6.2%).

Medicare Tax. As in prior years, there is no limit to the wages subject to the Medicare Tax; therefore, all covered wages are still subject to the 1.45% tax. Wages paid in excess of $200,000 will be subject to an extra 0.9% Medicare tax that will be withheld only from employees’ wages.

Health Flexible Spending Arrangements. The dollar limitation on voluntary employee salary reductions for contributions to a health flexible spending arrangement (FSA) is $2,650.

Health Savings Accounts. HSAs are for eligible individuals in a high deductible health plan.

The maximum annual contribution that can be made to an HSA in 2018:

  • Individual: $3,450
  • Family: $6,900

Catch-up contributions: Individuals 55 and older can make additional “catch-up” contributions to an HSA until they are enrolled in Medicare. The additional allowable contribution is $1,000.

IRA Contribution Limits. The 2018 contribution limit for Simple IRAs is $12,500. The catch-up contribution for those age 50 or older by December 31, 2018, is $3,000.

401(k), 403(b) and 457 Contribution Limits. The contribution limit for these plans’ employee deferrals is $18,500. The catch-up contribution for those age 50 or older by December 31, 2018, is $6,000.

Dependent Care Limits. The maximum exclusion from gross income under a dependent care program is $5,000 for an individual or a married couple filing jointly.

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