2011 Payroll Tax Rate Changes

published January, 2011

The IRS and EDD have some new forms and rates for this year.

If you’re a household employer, the magic number you need to know is 6.85%. This is the amount to withhold from each paycheck gross amount to get the net to pay your employee (until they make slightly over $90,000). See details below.

The Social Security withholding rate for employees has gone from 6.2% down to 4.2%, for employees only, the employer “match rate” remains at 6.2% (but now we need to call it something else). If you’re self-employed, instead of paying 15.3%, you’ll pay 13.3%.

The CA SDI withholding rate kept out of an employee’s paycheck has gone up from 1.1% to 1.2% on the first $93,316 earned in the calendar year.

There’s also a change to the Employer FUTA rate—but not until July 2011—for payments to employees who have made under the $7,000 limit. The rate will be 0.8% from January to June like it was, but if there are any employees subject to FUTA after July, the rate will go down to 0.6%—I know that’s going to compel ME to wait until July to hire anyone!

Also, at least at the moment, the “making work pay” credit has ended as of 12/31/10—this was the $400 refund of tax that some of my clients have heard me call the “Obama credit”—so this means the tax tables have changed slightly For more information, see IRS Notice 1036, or attend one of the Basic Payroll classes (see below).