“In this world nothing can be said to be certain—except death and taxes.” An HR professional trying to process payroll today might find the two analogous in ways Benjamin Franklin might have never imagined.
But we’ve got you covered. Below is a comprehensive list of federal tax rates, rules, and contribution limits for 2019.
*Please note that this information is accurate as of October 12, 2018.*
Since 1938, the United States has had a federally-mandated minimum wage. The rates for regular, tipped, and federally contracted employees are below. Be sure to check your local laws, as some states and cities have higher minimum wages in place.
Note that “maximum tip credit” refers to the difference between the regular and tipped minimum wages. If an employee’s hourly tips fall under this amount, the employer may be required to compensate them. State and local laws covering this may vary.
|Minimum Wage (national)||$7.25|
|Minimum Wage (tipped employees)||$2.13|
|Maximum Tip Credit||$5.12|
|Minimum Wage (federal contractors)||$10.35|
The Federal Insurance Contributions Act (FICA) tax is paid for by employees and employers in order to fund Social Security and Medicare.
The amount of employee earnings subject to taxation is capped. These caps and the tax rates for both social security and medicare are below:
|Social Security Taxable Wages||Up to $128,400|
|Social Security Tax Rate (Employee)||6.2%|
|Social Security Tax Rate (Employer)||6.2%|
|Social Security Tax Rate (Self-Employed)||12.4%|
|Medicare Tax Rate (Employee)||Up to $200,000 in earnings, 1.45%|
|Additional Medicare Tax Rate (Employee)||Past $200,000 in earnings, 0.9%|
|Medicare Tax Rate (Employer)||All wages, 1.45%|
|Taxable Wages per Employee||$7,000|
|FUTA Tax Rate||6%|
If an employer pays its workers wages outside of their regular salary (like bonuses or severance payments), these awards are considered “supplemental” and subject to a higher tax rate.
The 2018 tax rates for these types of payments are below. Note that any supplemental wages beyond the $1 million mark are taxed at a higher rate.
|Supplemental Tax Rate||22%|
|Supplemental Tax Rate (for wages beyond $1m)||37%|
The federal government places an annual limit on how much employees can contribute to their company’s retirement plans. These limits are regularly adjusted by the IRS to compensate for changes in the cost-of-living.
Note that once an employee is 50 years old, he or she will be eligible for a higher maximum, called a “catch-up” limit.
|Annual Limit||Annual Limit
(age 50 or over)
|401k, 403b, and 457||$19,000 per year||$25,000|
|SIMPLE IRA Plans||$13,000||$16,000|
Health Savings Accounts (HSAs) are a great way for some employees to pay for medical expenses. The funds stored in an HSA are tax deductible and the funds can be carried over from year-to-year.
The IRS places limits on how much employees are able to contribute to their HSA. Similar to some retirement plans, older employees are allowed to contribute slightly more to “catch-up."
|Annual Limit||Annual Limit
(age 55 or over)
|HSA Single Contribution||$3,500||$4,500|
|HSA Family Contribution||$7,000||$8,000|
A Flexible Spending Account (FSA) allows employees to use pre-tax funds to pay for certain out-of-pocket healthcare costs.
The funds must generally be used within the plan year—however, employers can either offer employees a “grace period” of 2 ½ months or allow them to carry over $500 to the following year.
Like many other pre-tax benefits, employee contributions are capped. The limit for 2018 is:
|FSA Single Contribution||$2,700|
Employees are permitted to contribute pre-tax dollars, up to a limit, to certain work-related transportation costs. Covered costs include transit passes, vanpooling, and parking expenses. Not all transportation costs are covered—the cost of fuel, for example, is not eligible. Note that states may have their own pre-tax contribution limits, too.
|Transit Passes||$260 per month|
|Parking Allowance||$260 per month|
The content of this publication is provided for informational purposes only and does not contain or constitute tax or legal advice. You should not act on this information without seeking tax or legal professional counsel.