Beginning January 1, 2020, the following changes go into effect for the withholding of payroll taxes and reimbursement of auto mileage:
The wage base for withholding social security tax has increased to $137,700 The social security tax rate will be 6.2% for both employers and employees for a maximum expense of $8537.40 For Medicare, the rate is still 1.45% each for employers and employees with no limit this year. Continuing in 2020 employees earning in excess of $200,000 will be subject to a mandatory additional 0.9% Medicare tax withholding regardless of their individual tax filing status. This withholding does not require the employer match.
STATE DISABILITY INSURANCE (SDI)
The taxable wage limit has increased to $122,909. The tax rate will remain at 1%. Maximum to withhold is $1229.09
FEDERAL AND STATE UNEMPLOYMENT INSURANCE
Both the Federal and State of California taxable wage bases remain the same for 2020 at $7,000. You will receive notification of your state tax rate. The FUTA tax rate is .06 all year.
STANDARD AUTO MILEAGE RATE
At this time the standard auto mileage rate for reimbursement of deductible costs of operating an auto for business will be 57.5 cents per mile.
For those clients for whom we prepare quarterly tax returns and annual information returns, please submit the necessary information as soon as possible to assist us in preparing your forms on a timely basis. Please be sure that you have given us the most current information on names and addresses of W-2 and 1099 recipients.
We are available to answer any questions you may have regarding the proper reporting and withholding of payroll. Please feel free to contact our office should you need assistance.