Written by: Annette Clark, CPA

A new year brings new payroll tax changes that you need to be aware of if you are preparing your own payroll. If you need assistance or have any questions please contact us.

  •  Michigan unemployment wage base has increased from $9,000 per employee to $9,500 for 2012. 
  • The Federal Unemployment tax rate for 2012 will be 1.8% on the first $7,000 earned by each employee. That rate is made up of the base rate of .6% plus 1.2% credit reduction tax.  The additional 1.2% is considered a 4th quarter liability. As long as the State of Michigan fails to repay the federal government for federal unemployment benefits this amount will increase by .3% each year. This will be the 4th year for Michigan.   If your UIA “actual reserve” is positive figure you should complete Form UIA 1110 to receive a credit for a portion of this excess tax on your Michigan unemployment return.
  • The Social Security wage base has increased from $106,800 in 2011 to $110,100 in 2012.
  • For wages paid from January 1, 2012 to February 29, 2012 the social security rate used to calculate employee’s withholding is 4.2%. The company match is still at 6.2%.  Unless the government extends this tax provision it return to 6.2% for the remained of the year.  We will keep you posted.
  • The elective deferral limit for employees who participate in 401(k), 403(b) and most 457 plans increased from $16,500 to $17,000 for 2012.