Payroll tax changes effective Jan. 1

On Jan. 1, 2013, Congress approved the American Taxpayer Relief Act of 2012.  This bulletin provides information on how this legislation will affect taxes deducted from paychecks beginning this month.

Social Security tax:

Because of the expiration of the “Middle Class Tax Relief and Job Creation Act,” the Social Security tax rate will increase as of Jan. 1, 2013. As a result, the Social Security tax rate reverts to 6.2% of your pay compared to the 2011 and 2012 temporary rate of 4.2%, an increase of 2%.

Federal Income tax rates:

The federal government provides every January new withholding tax tables to all employers based on the tax rates that will be in effect for the new calendar year. Your withholding may change impacting your first paycheck in January 2013.

The tax rates in effect for 2013 are summarized in the table below.

Description Tax Rate
Federal Income Tax IRS Tax Table, W-4 Rate
Social Security 6.2% on first $113,700 wages earned
Medicare* 1.45% (no limit)
NC State NC Tax Table, NC-4 Rate

You may update your federal and/or state income tax withholding allowances at any time.

W-4 Employee’s Withholding Allowance Certificate »
NC-4 Employee’s Withholding Allowance Certificate »

* Beginning in January 2013, individuals whose annual wages and compensation paid in excess of $200,000 will be subject to an additional 0.9% Medicare Tax, from 1.45% to 2.35%.  The additional withholding will be reflected in the pay period in which an employee’s compensation exceeds this threshold.  For more information, please refer to the IRS website:

If employees have any questions regarding this bulletin, please contact