Now's the perfect time to review and adjust your paycheck: Payroll Tax Rates and Employee Benefit Limits for 2022

7/16/2022

Now's the perfect time to review and adjust your paycheck: Payroll Tax Rates and Employee Benefit Limits for 2022

July is the perfect time to review and adjust your paycheck. At the start of every year there are tax law changes and revisions to some or all benefit limits, and too often employees don't adjust their paycheck for these changes.

This is actually very understandable as the new year is one of the most hectic time of the year. Instead of feeling bad about it, use the slower pace of the summer to do it.

To help enable this we've provided the 2022 Payroll Tax Rates and Employee Benefit Limits for you below:

Social Security tax

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.

Medicare tax

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.

Additional Medicare tax

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).

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401(k) limits

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.

HSA and HDHP limits

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.

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).

FSA limits

In 2022, employees can contribute:

Up to $2,850 to a health flexible spending account, increasing from $2,750 in 2021.
Up to $5,000 to a dependent care FSA if filing single or jointly, and up to $2,500 if married but filing separately. The American Rescue Plan temporarily raised the dependent care FSA limits in 2021 to $10,500 and $5,250, respectively. These increases do not apply in 2022.

QSEHRA limits

In 2022, employers with a qualified small employer health reimbursement arrangement can reimburse employees for health care expenses as follows:

$5,450 (self only), up from $5,300 in 2021.
$11,050 (family), up from $10,700 in 2021.

Commuter benefits limit

In 2022, employees can contribute up to $280 per month for qualified commuter benefits (e.g., mass transit and parking), up from $270 per month in 2021. This limit includes any employer contributions

Adoption assistance exclusion limit

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.

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5 Personal Finance Tips That both Young and Old Can Use Effectively

2/19/2022

Blog Summary

Even if you have enough money in the bank and take home a consistent paycheck, you still need to make a conscious and consistent effort to manage your money effectively.

Create a Budget
Pay Down Debt
Build Your Savings
Minimize Impulse Purchases
Maximize Employee Benefits

Concentrate on making incremental gains consistently. Financial situations rarely turn around overnight, as more often, positive change is brought about by many small wins.

Many people overestimate their financial stability. Even if you have enough money in the bank and take home a consistent paycheck, you still need to make a conscious and consistent effort to manage your money effectively.

If you want more financial freedom and to take complete control of your finances, follow these 5 guidelines.

Create a Budget

A true budget is much more than a dollar amount you don't exceed each month. Have you listed and added up your expenses lately? If you haven't, there's a good chance you're spending more than you think. Keep close track of where your money is going so you can adjust accordingly. You should never be unsure of what you can and can't afford

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Pay Down Debt

The interest you pay on debt is money you're literally giving away. If you have a large balance on a credit card, limit your spending on that card until you pay it down. If you're paying off student loans, try to pay more than the minimum so you actually see your total go down and you're not just paying the interest each month.

Build Your Savings

It can be downright painful to take even a small chunk out of your paycheck for savings, but if you can force yourself to do it the first few times, you'll be happy with the results when you start to see your savings account grow. Pick a realistic percentage of each paycheck to deposit into your savings account and hold yourself to the task. If you want your savings to grow faster, look into a savings account with higher interest. The bank may require that you keep a large balance in it at all time, but it's worth it for the interest your money will accrue.

Minimize Impulse Purchases

Payday is a wonderful thing, and there's nothing wrong with treating yourself in order to unwind after a long week. However, if you are thinking of purchasing an item you don't necessarily need, it's best to walk away from it and see if it's still on your mind a day or two later. If it is and you can afford it, then go for it. But you might find that you'd rather save the money.

Maximize Employee Benefits

Employee benefits are the company's way of thanking you for your hard work and supporting your overall well-being. Take them up on free gym memberships or parking passes instead of wasting your own money on these things. If your company has a 401k matching program, definitely enroll. Pick a dollar amount to take out of your paycheck that will go into the account each pay period. Choose a number that you're comfortable with but try to challenge yourself to put in more than you think you can. Your company will now match that number and you can watch your 401k blossom!

Acquiring financial freedom and being debt-free is one of the best feelings in the world. Contact us today for more information on how to get a handle on your personal finances.

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