What Are The Latest Payroll Tax Updates?

If you own a small business and have employees, you should frequently check for the latest payroll tax update from the Internal Revenue Service IRS to ensure that you are withholding the correct amount of federal income tax, Social Security and Medicare taxes from your employee's paycheck. Failure to withhold adequate amounts from your employee’s salaries or wages may result in your having to pay the taxes on their behalf and could also cost you a lot of money in fines and penalties. So, here's a quick list of the latest payroll tax updates

IRS Federal Tax Withholding Percentages for 2009

The most current revision of IRS Publication 15-T “New Wage Withholding and Advance Earned Income Credit Payment Tables” reflects that the maximum income tax rate percentage is 35%. Also, for single persons not earning more than $7180 and married couples not earning more than $15,750 there is no income tax liability at all.

Latest Social Security Tax Rate

For 2009, the Social Security tax rate remains steady at 6.2%. However, the maximum Social Security income for which benefits may be tax has been increased to $106,800.

Medicare Tax Rate

The Medicare contribution withheld from employee wages and salaries remained constant at 1.45% for all earned income. Medicare continues to be taxed on all earned wages - even wages above the Social Security income cap level.