Effects of Recent Tax Legislation

The recently passed tax legislation preserves tax rates as they were at the end of 2012 except for those individuals earning more than $400,000 and households earning more than $450,000. The rate for earnings above those amounts will increase to 39.6% from the current 35%. The legislation extended permanently the exclusion from income and employment taxes of up to $5,250 annually in graduate educational assistance to an employee.

In addition, as of January 1, 2013, the employee Social Security tax rate increased from 4.2% to 6.2% (the Social Security wage-base limit is $113,700). As a result, everyone will get a smaller net paycheck through 2013.

Contact the Controller’s Office with questions.