Paychex Explains Key Highlights of Fiscal Cliff Deal for America's Small Businesses and Wage Earners
ROCHESTER, N.Y. - (BUSINESS WIRE) - Paychex, Inc., a leading provider of payroll, human resource, and benefits outsourcing solutions for small- to medium-sized businesses, today outlined the essential elements of the American Taxpayer Relief Act of 2012 on behalf of America's small businesses and all wage earners. The legislation was passed Tuesday by Congress to avoid the "fiscal cliff," and signed by President Obama late last night. The new tax tables reflecting the rate changes implemented by the Act were released by the IRS today. Paychex has implemented these changes, and they will be reflected in our clients' payrolls beginning tomorrow, January 4, 2013.
The primary payroll-tax related provisions of the American Taxpayer Relief Act of 2012 include:
- Expiration of the "payroll tax holiday." The expiration of this provision means the employee Social Security tax rate will go from 4.2 percent back to 6.2 percent, up to the 2013 taxable wage limit of $113,700.
- Extension of the lower "Bush era" income tax rates for individuals earning up to $400,000 and households earning up to $450,000. The tax rate for earnings in excess of those thresholds will now increase from 35 percent to 39.6 percent.
The payroll tax holiday, first enacted in 2011 and then extended through 2012, was intended to be a temporary tax break for American workers to help spur spending during the height of the recession. With the passage of this Act, the Social Security tax rate returns to 6.2 percent and is expected to impact a majority of American workers. For example, a worker earning $50,000 per year will now see $1,000 less in their net take-home pay as compared to 2012.
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