FEDERAL:
The FICA rate is 6.2% for the employer and the employee on wages up to $132,900. The Medicare rate is 1.45% for the employer on all wages paid to the employee. The Medicare rate remains 1.45% for the employee on all wages, plus an additional 0.9% of Medicare tax is withheld on all wages in excess of $200,000 ($250,000 for joint returns; $125,000 for married taxpayers filing a separate return). Employers must begin withholding the additional Medicare tax once an employee’s wages exceed $200,000, even if the employee may not ultimately be liable for the additional tax. Any excess additional Medicare tax withheld will be credited against the total tax liability shown on the employee’s income tax return.
Effective July 1, 2011 the FUTA (federal unemployment insurance) rate changed to and will remain at .6% (.006) of the first $7,000 paid to each employee. Employers are still required to make quarterly deposits for unemployment taxes when the accumulated amount reaches $500.
Also, effective for the year 2018, California repaid all of its outstanding federal unemployment insurance loans. There is no increase to additional taxes of .6% for the year 2018. All California employers WILL NOT be required to fill out Schedule A when preparing your year-end Form 940.
Employers have to file all Federal W-2s with Social Security Administration and provide copies to employees by January 31, 2019. Forms 1099’s also have to be filed with IRS by January 31, 2019.
STATE:
The State Disability Insurance (SDI) withholding rate is 1.00% (.01). The SDI taxable wage limit is $118,371 per employee, for a maximum amount to be withheld of $1,183.71.
The deposit requirement for state withholding (PIT) and state disability (SDI) is based on your federal deposit schedule. If you deposit your federal taxes semi-weekly then your state taxes should be deposited semi-weekly. If you deposit your federal taxes monthly then your state taxes should be deposited monthly.
The SUI (state unemployment) rate is assigned by EDD. Each year, usually in December, you receive a notice from the EDD informing you of your rate. Your SUI rate is calculated on the first $7,000 of wages paid to each employee. You may deposit the SUI with other deposits during the quarter or deposit the SUI at the end of each quarter.
Beginning January 1, 2018, all employers will be required to electronically submit employment tax returns, wage reports, and payroll tax deposits to the EDD.
Effective January 1, 2019 minimum wage for employees is $12.00/hour if you employ 26 employees or more. The wage is $11.00/hour for employers with 25 employees or less until January 1, 2020.
Effective January 1, 2017 statewide sales and use tax rate in California is 7.25%. To check for rates affecting your county or city, go to: https://www.cdtfa.ca.gov/taxes-and-fees/rates.aspx.
