Regulatory Tax Changes for Calendar Year 2013

In response to the federal regulatory changes that were approved January 2, 2013, the following revisions will be reflected in the payroll checks/vouchers and other payments issued by Duke University and Health System in calendar year 2013.

Corporate Payroll Services Transactions

Employee Social Security Tax Rates Increase

The OASDI portion of the Social Security tax will increase from 4.2% to 6.2% for all employees who pay Social Security taxes.  The 4.2% rate was in place for calendar years 2011 and 2012 as a temporary reduction.

An additional Medicare tax rate of 0.9% will apply to all wages in excess of $200,000 during calendar year 2013.  Please note that employers are required to withhold based upon an individual’s wages.  As a result, employees should work with their accountants to assess projected annual income for calendar year 2013.  If employees elect to have additional withholding from their federal taxes, they may process the changes through Duke@Work.  

Federal Tax Withholding Changes

The IRS is in the process of revising withholding tables based upon the recently approved regulatory changes.  These changes will be applied to the Payroll system immediately upon receipt; however, the biweekly payroll for payments dated January 11 will utilize the 2012 Federal Tax Withholding calculations as instructed by the IRS.

The 2013 federal tax withholding for the majority of employees should reflect a slight reduction of federal taxes for taxable income up to $400,000.

Federal tax withholding will increase for employees who have taxable income greater than $400,000.

North Carolina State Tax Withholding

North Carolina Tax withholding tables remain unchanged.

Supplemental Federal Tax Rates

The flat tax rate for supplemental payments will remain 25% for all supplemental payments up to $1,000,000.

The flat tax rates for supplemental payment amounts in excess of $1,000,000 will increase from 35.0% to 39.6%.

Corporate Accounts Payable Transactions

Back Up Withholding Rates

Payments made to external vendors that do not provide a valid Taxpayer Identification Number remains unchanged at 28%.

Employee Travel & Reimbursement Transactions

Educational Assistance

The income exclusion for the employee undergraduate and graduate educational assistance provided by the employer up to $5,250 per year remains in place and has become a permanent exclusion.

Please share this information with all employees.  Staff members may elect to contact their individual tax accountants for additional guidance. 

You may contact Corporate Payroll Services at 684-2642, if you have any questions or need additional information.  We appreciate your continued support.