The Social Security Administration has announced that the wage base for computing Social Security tax in 2012 will increase from $106,800 to $110,100. The wage base has been at $110,800 since 2009. It is increasing about 3% due to an increase in average wages. What this means is an employee will pay 6.2% on their earnings until they have earned $110,800. Once they have earned the $110,800 they no longer will have to pay Social Security tax. Employers also pay 6.2% Social Security tax on an employee’s wages and the same thing applies to them.
The Social Security Administration also announced that in 2012 individuals who pay for domestic service (housekeepers or nanny’s are the common ones) will now have to pay FICA tax if they pay these individuals $1,800 or more. A $100 increase from 2011.
18 States are increasing their unemployment insurance taxable wages base in 2012 and Colorado is one of them. Colorado was previously at $10,000 and is increasing to $11,000. This means that employers will now have to pay unemployment tax on their employees on the first $11,000 of wages the employee earns. The rate the employer pays varies and is based on the industry they are in. Employers receive their rate each year from the State of Colorado. Most employers saw their rates increase last year. Many saw them double and a few saw them triple and now this year they are going to have to pay that rate on an extra $1,000!
How’s that for no new taxes?