Federal Tax Rates for 2020

 

As of 01/01/2020  the Circular E, pub 15-T, with a revision date of 12/20/2019 is available on the IRS.GOV website with the figures shown in this document. 

 

*** 2020 tax bracket percentages have NOT changed.  Most of the breakpoint & tax amounts as well as the standard exemptions HAVE changed***   Please report any suspected discrepancies or questions to the MVS Alliance support team ASAP.

 

 

Below are the Federal figures needed in the Tax Table Maintenance program (Task 23 in the Payroll module).  The ‘codes’ indicate its purpose, for example: USWKLY means Weekly Single rates for Federal Withholding.  US- United States; WK – Weekly; SL – Single.  Please see the document titled:  2020 FICA & FUTA LIMIT & PERCENTAGE RATES for additional information, especially regarding FICA limits, printing W2 forms and first payroll for a new year.

 

These rates are based on the http://www.irs.gov/ website Publication 15-T, Federal Income Tax Withholding Methods 2020

 

Social security and Medicare tax for 2020. The social security tax rate is 6.2% each for the employee and employer, unchanged from 2019. The social security wage base limit is $137,700 which has changed from 2019.

 

The Medicare tax rate is 1.45% each for the employee and employer, unchanged from 2019. There is no wage base limit for Medicare tax. 

 

Withholding allowance. The 2020 amount for one with-holding allowance on an annual basis is $4,300.00 which increased from 2019.

  

Reminders

Additional Medicare Tax withholding. In addition to withholding Medicare tax at 1.45%, you must withhold a 0.9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. You are required to begin withholding Additional Medicare Tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. Additional Medicare Tax is only imposed on the employee. There is no employer share of Additional Medicare Tax. All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 withholding threshold.

For more information on what wages are subject to Medicare tax, see the chart, Special Rules for Various Types of Services and Payments, in section 15. For more information on Additional Medicare Tax, visit IRS.gov and enter “Additional Medicare Tax” in the search box.

  

2020 FUTA:

For 2020, the FUTA tax rate is unchanged at 6.0%. Please note that if your state & specific situation qualify for the maximum credit of 5.4% then your effective FUTA rate in the Profits Plus payroll system should remain unchanged at 0.60% as well.  The tax applies to the first $7,000 you pay to each employee as wages during the year. The $7,000 is the federal wage base. Your state wage base may be different.  

To verify you should contact the appropriate tax authority or your accountant/CPA.   

 

 

Updating your federal tax tables:

• To update the Federal tax tables go to Payroll (Module 1)
  • Tax table Maintenance (Task 23)
    • Change existing tax record (Sub-task 2) 

 

In all tables, fields 16-20 are zero's / unused again for 2020.