US employment tax rates and limits for 2016 - United States

1 US employment tax rates and limits for 2016 Final ContentsSocial Security wage base for 2016 1 Qualified pension plan limits for 2016 2 Health Savings Account limits for 2015 and 2016 3 Fringe-benefit inflation adjustments for 2016 4 Federal mileage rates for 2016 5 Per diem rates under high-low substantiation 6 method for 20162015 FUTA credit reduction States 8 State unemployment insurance wage base 10 limits for 2014 through 2016 Disability insurance wage bases 12 and rates for 2016 Federal income tax withholding for 2016 132016 state supplemental income tax 14 withholding ratesStates with revised income tax withholding 16 tables for 2016 Social Security wage base for 2016 The Social Security wage base remains unchanged at $118,500 in 2016 , as projected in the July 2015 Annual Report of The Board of Trustees published by the Social Security Medicare tax rate for 2016 remains at of all covered earnings for employers and employees; however, for wages in excess of $200,000, the additional Medicare tax of applies to earned income of more than $200,000 ($250,000 for married couples filing joint).

2 While employers are required to withhold the additional on covered wages in excess of $200,000, there is no employer matching the complete Social Security Administration fact sheet, go Security, Medicare and disability insurance contributions 2015 compared with 2016 Description 20152016 IncreaseSocial Security tax rate for -0-Social Security tax rate for Security wage base$118,500$118,500-0-Maximum Social Security tax for employees$7,347$7,347-0-Medicare tax rate for tax rate for employees * -0-Medicare tax rate for employees on wages above $200,000* wage base No limit No limit N /A* Employers must withhold an additional Medicare tax of of wages in excess of $200,000. There is no employer matching employment tax rates and limits for 2016 Final |Qualified pension plan limits for 2016 The dollar limitations for qualified retirement and certain non-qualified plans that become effective January 1, 2016 , were released by the IRS in dollar limitations that are adjusted by reference to IRC 415(d) are adjusted for inflation, and consequently the pension plan limitations will not change for 2016 because the increase in the cost-of-living index did not meet the statutory thresholds that trigger their adjustments.

3 Plan participants in qualified retirement plans will need to consider the impact of the 2016 dollar limitations in their overall financial pretax limit that applies to elective deferrals to 401(k), 403(b) and most 457(b) plans remains unchanged at $18,000. The dollar limitation for catchup contributions for participants age 50 or over also remains unchanged at $6, retirement plan limitations (2015 compared with 2016 )Description2015 limit2016 limitParticipant pretax contribution limit for 401(k) and 403(b) plansSection 402(g)(1)$18,000$18,000 Deferral limit for deferred compensation plans of state and local governments and tax-exemptsSection 457(e)(15)$18,000$18,000 Dollar limitation for catchup contributions for participants age 50 or over in 401(k), 403(b), governmental 457 plans and SEPsSection 414(v)(2)(B)(i)$6,000$6,000 Dollar limitation for catchup contributions for participants age 50 or over to a SIMPLE IRA or a SIMPLE 401(k)Section 414(v)(2)(B)(ii)$3,000$3,000 Defined benefit plan limit1 Section 415(b)(1)(A)

4 Lesser of $210,000 or 100% of the participant s three-year-high compensation Lesser of $210,000 or 100% of the participant s three-year-high compensationDefined contribution plan limitSection 415(c)(1)(A)Lesser of $53,000 or 100% of participant s compensation Lesser of $53,000 or 100% of participant s compensationMaximum ESOP account balance subject to a five-year distribution period/increments for additional yearSection 409(o)(1)(C)(ii)$1,070,000/$210,000$1,07 0,000/$210,000 Highly-compensated-employee dollar thresholdSection 414(q)(1)(B)$120,000$120,000 Definition of key employee in a top-heavy plan officer compensation thresholdSection 416(i)(1)(A)(i)$170,000$170,000 Annual limit on includible compensation for benefits and allocations2 Sections 401(a)(17), 404(l), 408(k)(3)(C) and 408(k)(6)(D)(ii)$265,000$265,000 SEP employee participation floorSection 408(k)(2)(C)$600$600 SIMPLE retirement accounts contribution limitSection 408(p)(2)(E)$12,500$12,500 Compensation amount of control employees for fringe benefit valuation purposesTreas.

5 Reg. Section (f)(5)(i) and (iii)$105,000/$215,000$105,000/$215,000 Footnotes1 For a participant who separated from service before January 1, 2016 , the participant s limitation under a defined benefit plan under IRC 415(b)(1)(B) is computed by multiplying the participant s compensation limitation, as adjusted through 2015, by 2 For eligible participants in certain governmental plans that allow cost-of-living adjustments to the compensation limit to be taken into account, such limit is unchanged at $395,000. 2| US employment tax rates and limits for 2016 FinalHealth Savings Account limits for 2016 and 2015In Rev. Proc. 2015-30, the IRS announced the 2016 inflation adjustments that will apply to Health Savings Accounts (HSAs) under IRC 223 effective for calendar year Savings Account limit type20162015 Contribution*Self$3,350$3,350 Family$6,750$6,650 Out-of-pocketSelf$6,550 $6,450 Family$13,100$12,900 Deductible (high-deductible health plan)Self$1,300 $1,300 Family$2,600$2,600* Additional contribution of $1,000 is permitted for individuals age 55 and older.

6 Those enrolled in Medicare are not eligible to employment tax rates and limits for 2016 Preliminary as of January 6, 2016 |3 Fringe-benefit inflation adjustments for 2016In Revenue Procedure 2015-53, the IRS published the inflation adjustments that will apply to various fringe benefits in medical savings account (MSA) limits go up in most cases Summarized below are the 2016 limits that apply to MSAs under IRC 220(c)(2)(A). Provision Self-only coverage Family coverageHigh-deductible health plan annual deductible Not less than $2,250 (up from $2,200 in 2015) and not more than $3,350 (up from $3,300 in 2015)Not less than $4,450 (unchanged from 2015) and not more than $6,700 (up from $6,650 in 2015)Annual out-of-pocket (other than for premiums)Not to exceed $4,450 (unchanged from 2015)Not to exceed $8,150 (unchanged from 2015)Adoption assistance limit goes up The limit on qualified adoption assistance (including special needs children) for 2016 is $13,460, up from $13,400 in 2015.

7 Health flexible spending account limit unchanged The 2016 annual limit on the amount of pretax contributions employees can make toward their health flexible spending account under a cafeteria plan is $2,550, unchanged from 2015. Transportation fringe benefits go up The 2016 monthly limit on parking benefits is $255, up from $250 in 2015. The 2016 aggregate monthly limit for transportation in a commuter highway vehicle and any transit pass is also $255 due to legislation enacted on December 18, 2015, under HR 2029 that permanently gives parity to parking and transit | US employment tax rates and limits for 2016 FinalFederal mileage rates for 2016 Effective January 1, 2016 , the business standard mileage rate (including vans, pickup trucks, and panel trucks) decreases from $ per mile to $ while the rate for medical and relocation decreases from $ per mile to $ Mileage related to charity is set by statute and remains at $ per mile.

8 (IRS Notice 2016 -01)Note that the business standard mileage rate may not be used (1) after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS), (2) after claiming the IRC 179 deduction for that vehicle, (3) after claiming depreciation using a method other than straight-line for the estimated useful life, or (4) to compute the deductible expenses for more than four vehicles used simultaneously. (Rev. Proc. 2010-51, IRB 883) Federal mileage rates : 2015 compared with 2016 Type of mileage Effective January 1, 2015 Effective January 1, 2016 Business standard $ $ $ $ and medical $ $ employment tax rates and limits for 2016 Final |Per diem rates under high-low substantiation method for 2016In Notice 2015-63, the IRS released the per diem reimbursement rates that will apply effective October 1, 2015 (or, optionally, January 1, 2016 ).

9 The per diem reimbursement rate for high-cost areas increases from $259 to $275 and from $172 to $185 for low-cost areas. There were also a number of changes to the areas that qualify as high per diem rates for each locality of travel in the Continental United States (CONUS) can be found here. Per diem rates for travel outside of the Continental United States (OCONUS) are available on the Department of Defense website. Foreign per diem rates can be found on the Department of State website. For more information, click here. Federal per diem rates under the high-low substantiation method for 2015 Description High-cost areaLow-cost areaLodging, meals and incidentals$275 $185 Lodging only$207$128 Meals and incidentals only$68$57 Incidental expenses only*$5$5*Rate applies only when a meal expense allowance is not localities of travel under the high-low substantiation method (effective October 1, 2015)Changes from last year are shown in yellowKey cityCounty/other defined locationArizonaSedona (March 1 May 31) City limits of Sedona CaliforniaMammoth Lakes ( )MonoMonterey (July 1 Aug.)

10 31)MontereyNapa (Oct. 1 30; May 1 Sept. 30)Napa San FranciscoSan FranciscoSan Mateo/Foster City/BelmontSan MateoSanta BarbaraSanta BarbaraSanta Cruz (June 1 Aug. 31)Santa CruzSanta Monica City limits of Santa Monica Sunnyvale/Palo Alto/San JoseSanta ClaraColorado Aspen (Dec. 1 March 31; June 1 Aug. 31) Pitkin Denver/AuroraDenver, Adams, Arapahoe and JeffersonGrand Lake (Dec. 1 March 31)GrandSilverthorne/Breckenridge (Dec. 1 March 31)SummitSteamboat Springs (Dec. 1 March 31)RouttTelluride (Dec. 1 March 31; June 1 Aug. 31)San Miguel Vail (Dec. 1 March 31 and July 1 Aug. 31) Eagle District of ColumbiaWashington, DCAlso the cities of Alexandra, Falls Church and Fairfax and the counties of Arlington and Fairfax in Virginia, and the counties of Montgomery and Prince George s in Maryland (see also Maryland and Virginia) 6| US employment tax rates and limits for 2016 FinalKey cityCounty/other defined locationFlorida Boca Raton/Delray Beach/Jupiter (Jan.