If you own or operate a business, you’re no stranger to payroll taxes — the money you withhold from an employee’s pay to remit to government tax collectors on the employee’s behalf. You pay a portion of these taxes, and your employees pay a portion. The money collected is allocated to the following:

• Federal Insurance Contributions Act (FICA) to fund Old Age, Survivors, and Disability Insurance (OASDI), also known as Social Security and Disability, and Medicare (health insurance for senior citizens and the disabled)
• State Disability Insurance (SDI)
• Federal Unemployment Insurance (FUI)
• State Unemployment Insurance (SUI)
• Employment Training Tax (ETT)

In today’s post, we’ll bring you up to speed on what you need to know to plan for, pay, and remain in compliance with these and other withholdings for 2022. We’ll also share information about important changes and reminders that your business needs to be aware of for the year ahead. First up, Social Security.

Social Security Tax

For 2022, the Social Security tax rate is 6.2 percent for employer and employee — unchanged from 2021. The Social Security wage base has increased from $142,800 in 2021 to $147,000 in 2022. In other words, Social Security tax applies only to the first $147,000 an employee earns, so the maximum you would withhold on behalf of the employee is $9,114.

Keep in mind that the employee’s share is only half of the total Social Security tax owed. As an employer, you are responsible for paying the other half. So, if you deduct and remit $9,114 on behalf of your employee, you are required to pay an additional $9,114 as employer.

Self-employed individuals are required to pay both “halves,” so a self-employed individual with a net income of $147,000 would pay $9,114 x 2 = $18,228 in Social Security Tax. To take some of the sting out of paying both halves of FICA, self-employed individuals receive a deduction for self-employment tax on their federal income tax return.

Medicare Tax

The Medicare tax rate is Continue reading… Continue reading… Continue reading…