Most workers who have jobs that include withholding federal taxes from their paychecks may have already noticed it, but the Internal Revenue Service confirmed in a Feb. 27 Twitter statement that the tax bite has gone up.
The IRS re-released a preliminary statement it made on Jan. 3 that taxes are up. The IRS said the increases are the result of the budget deal passed by Congress and signed by President Barack Obama in late 2012.
"The employee tax rate for social security is 6.2 percent," the IRS said. "Previously, the employee tax rate for social security was 4.2 percent. The employer tax rate for social security remains unchanged at 6.2 percent. . . Employers should implement the 6.2-percent employee social security tax rate as soon as possible, but not later than Feb. 15. After implementing the new 6.2-percent rate, employers should make an adjustment in a subsequent pay period to correct any underwithholding of social security tax as soon as possible, but not later than March 31."
Medicare taxes also went up for workers in higher income brackets.
"In addition to withholding Medicare tax at 1.45 percent," the IRS said, "you must withhold a 0.9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. You are required to begin withholding additional Medicare tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year."
Changes were also made in the percentage method tables for income tax withholding.