Got questions about tax rates on your January paycheck?
The results of negotiations between the U.S. Congress and the Obama Administration concerning 2013 federal income tax rates for individuals could have an effect on your paycheck.
As you may know from following the news, leaders in Washington, D.C., are engaged in talks about the 2013 federal income tax rates as part of the “fiscal cliff” negotiations. As of this writing, no agreement has been reached.
Because UC processes early January payroll payments for many employees prior to the holiday break, we will continue using the existing 2012 federal tax rate schedule until Congress and President Obama reach agreement and the IRS provides guidance for the federal tax withholding rates for 2013.
As soon as the IRS publishes official guidance, the university will update our payroll system to begin withholding at the new tax rates. The payroll system will not make any retroactive adjustments once the new rates are implemented.
Your early January paycheck will reflect two tax changes:
- The employee share of OASDI (Social Security), which will revert from 4.2 percent to the historical 6.2 percent tax rate
- New 2013 California income tax rates resulting from passage in November of Governor Brown’s income and sales tax initiative, Proposition 30