In 2022, the Social Security tax rate is 6.2% for employers and employees, unchanged from 2021. The Social Security wage base is $147,000 for employers and employees, increasing from $142,800 in 2021. Self-employed people must pay 12.4% on the first $147,000.

In 2022, the Medicare tax rate for employers and employees is 1.45% of all wages, unchanged from 2021. Self-employed people must pay 2.9% on all net earnings.

In 2022, the additional Medicare tax remains unchanged at 0.9%. This tax applies to wages and self-employment income over certain thresholds ($200,000 for single filers and $250,000 for joint filers).

In 2022, the maximum contributions to traditional and safe harbor plans are as follows:​​

• Employee catch-up (age 50 or older) = $6,500, unchanged from 2021.
• Employee and employer (age 49 or younger) = $61,000, up from $58,000 in 2021.
• Employee and employer (age 50 or older) = $67,500, up from $64,500 in 2021.
  
• Employee (age 49 or younger) = $20,500, up from $19,500 in 2021. 

Employees can contribute up to $14,000 to a SIMPLE 401(k) plan, up from $13,500 in 2021.

In 2022, the maximum contributions to a health savings account are as follows:

• Employer and employee = $3,650 (self only), $7,300 (family).
• Catch-up amount (age 55 or older) = $1,000.

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In 2022, the limits for a high-deductible health plan are as follows:

• Minimum deductibles = $1,400 (self only), $2,800 (family).
• Maximum out-of-pocket amounts = $7,050 (self only), $14,100 (family).

In 2022, up to $14,890 in employer-sponsored adoption assistance may be excluded from an employee's gross wages, increasing from $14,440 in 2021.

​Remember, these are all federal rates and limits. Be sure to check with the necessary agencies for state and local payroll rates.

​If fewer man-hours are proposal, have a plan for the extra time. ​​

• ​​Can employees help on proposals or other projects?
• ​Can you delegate certain administrative activities?

It may also be possible to have an employees take/coordinate paid time off (PTO) with contract and internal activities in mind. Undoubtedly this will require better and more consistent planning and even company guidelines so it's fair to all. Further, find out  as early as possible if/when employees are going to take vacation. If employees are going to be required to use their vacation during a certain time period, check with the HR department or an HR consultant to ensure this does not violate any labor laws and is in compliance with the company handbook and policies.

When bidding, take into account when employees will be receiving performance reviews, especially if it is done on the employee's anniversary date and not at one time for the entire company.
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A "bigger picture" question for the company is whether salary increases depend on the financial performance of the contract or solely on one's individual performance. We have experienced companies basing increases both ways. We are not an advocate for a specific method; however, it must be consistent throughout the company.

Have there been any new hires? Depending on whether an employee with the necessary skill-set is relatively easy or difficult to find, this could affect the profit positively or negatively. 

• Does the company have to pay for the new employee to attend training?
  • If so, is this on the company's dime?​
• Does there need to be overlap with the former employee and the new employee? 

​This would be an additional cost that most likely could not be foreseen, but the impact should be measured.

​​Are there any costs that the company did not account for in the proposal and that are not covered by a separate Other Direct Cost (ODC) line item?

Examples Include:

• ​For example, did the company need to buy additional software specific to the project and not billable?

How do the provisional indirect rates compare to the actual indirect rates? If the actual indirect rates are lower, of course this increases profit. Conversely, if the actual indirect rates are higher, this lowers profit. After the EAC is complete, this is an opportune time for the company to review indirect rates, and make cuts if necessary. Reviewing suppliers and vendors on a regular basis is a best practice.

Partway through an FFP Service Contract, check and see whether the 10% profit that was bid is still projected to be 10% or will more likely be closer to 6% or 14% profit. The company may be pleasantly surprised. If not, possibly adjustments can be made. At the very least, the company cannot say it did not have advance warning and can plan accordingly.

Focus on the five areas listed above and your company will maximize its profit on FFP service contracts.

"The IRS is adjusting the standard mileage rates to better reflect the recent increase in fuel prices," said IRS Commissioner Chuck Rettig. "We are aware a number of unusual factors have come into play involving fuel costs, and we are taking this special step to help taxpayers, businesses and others who use this rate."

Though the price of fuel is definitely a major factor when it comes to calculating your mileage, there are other factors that have to be taken into account, including the rate at which your car depreciates as well as its insurance and any other fixed costs you might have.​

Further details are available in IR-2022-124.