Financial Services reports that university employees may see increases in Social Security and Medicare taxes in 2013. A temporary payroll tax cut is scheduled to expire Dec. 31. If the reduction is not extended, Social Security withholding will revert to 6.2 percent, a 2 percent increase. Also, individuals earning more than $200,000 a year will be assessed Medicare tax starting Jan. 1.
Social Security Tax
The Temporary Payroll Tax Cut Continuation Act of 2010 that extended the reduction in Social Security tax withholding from 6.2 percent to 4.2 percent on employees' wages is scheduled to expire Dec. 31. If the reduction is not extended, Social Security withholding will revert to 6.2 percent beginning Jan. 1. In addition, the Social Security Administration has announced that the contribution and benefit base for wages and self-employment income earned in 2013 will increase to $113,700. The 2012 figure is $110,100.
Medicare Tax Increase for High-Wage Earners
As part of the Patient Protection and Affordable Care Act, individuals earning in excess of $200,000 a year will be assessed an added Medicare tax starting Jan. 1. Wages up to $200,000 will be taxed at 1.45 percent (the present rate for all wage earners) while amounts greater than $200,000 will be taxed at 2.35 percent. There is no cap on the amount of Medicare tax.