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ADP Assists Clients with Newly Enacted Changes to 2013 Payroll and Employment Tax Laws
- Congress Passes the American Taxpayer Relief Act of 2012
By: PR Newswire
Jan. 2, 2013 06:00 AM
ROSELAND, N.J., Jan. 2, 2013 /PRNewswire/ -- ADP ® today reaffirmed that the company is ready to assist clients in understanding and addressing any tax law changes impacting payroll and employment tax administration in 2013. For more than 60 years, ADP has addressed tax law modifications in a timely manner.
During the past several months, ADP has been in constant contact with the U.S. Internal Revenue Service (IRS) regarding 2013 tax changes and has been regularly sharing legislative updates through its "Eye on Washington" section of ADP.com. ADP's "Eye on Washington" is an online resource dedicated to keeping clients informed of federal regulatory activity that impacts payroll and employment tax administration.
The House and Senate have passed H.R. 8, the American Taxpayer Relief Act of 2012 (ATRA). President Obama is expected to sign the bill into law within 24 hours. The ATRA includes several changes to tax laws affecting payroll and employment tax administration in 2013, which will generally be effective upon enactment.
The Act effectively maintains the reduced income tax rates adopted in 2001 and 2003 for individuals earning up to $400,000 and families earning less than $450,000. Income above those levels will be taxed at 39.6%, up from 35%. The expanded 15% bracket for joint filers, commonly referred to as the marriage penalty relief, has also been extended. These tax rates have been extended permanently for wages paid after December 31, 2012.
Employee Social Security tax rates have returned to 6.2% for 2013 wages up to the taxable wage limit of $113,700. Prior to 2013, the Social Security tax rate was 4.2%.
In addition, although not affected by the ATRA, the Patient Protection and Affordable Care Act established a new "Additional Medicare Tax" of 0.9% which goes into effect in 2013. The new Additional Medicare Tax applies to single individuals earning over $200,000 and married couples who earn over $250,000 and file jointly. However, employers must withhold the Additional Medicare Tax from all workers, regardless of marital status, from wages exceeding $200,000. Thus, the employee Medicare tax rate, normally 1.45%, will rise to 2.35% on earnings over $200,000, regardless of filing status. The employer Medicare tax rate remains 1.45%. There is no taxable wage limit for Medicare taxes.
ADP experts have been closely monitoring the progress of the American Taxpayer Relief Act of 2012, and assessing its impact to employers. There are many other provisions that are part of the ATRA that will impact both employers and employees. ADP maintains a dedicated team of professionals who carefully monitor all federal and state legislative and regulatory measures affecting human resource, payroll, tax and benefits administration, and ensure that ADP systems are updated as relevant laws evolve. For the latest on late-breaking federal tax law changes, visit the ADP "Eye on Washington" web page located at www.adp.com/regulatorynews.
Please note: ADP "Eye on Washington" notices are provided as a courtesy to ADP clients to assist in understanding the impact of certain regulatory requirements. They should not be construed as tax or legal advice, and interested parties are encouraged to consult with appropriate legal and/or tax advisors.
SOURCE ADP, Inc.
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