2010 Payroll Tax Rates

January 2010 - The following summary should help you to prepare for the new tax changes effective January 1, 2010.

Federal Income Tax Withholding - Use the Circular E Employer’s Tax Guide (Rev. January 2010). This publication contains the income tax withholding rates and tables for wages paid beginning January 2010. Use this publication to determine the proper deposit date for payroll taxes.

Social Security (FICA) Tax - The tax rate for 2010 is 6.2 percent for both the employee and the employer on the first $106,800 paid. The maximum tax to be paid by the employer on behalf of the employee is $6,621.60.

Hospital Insurance Tax (Medicare) - The tax rate for 2010 is 1.45 percent for the employee and also 1.45 percent for the employer. All 2010 wages are subject to the Medicare tax.

Pennsylvania Income Tax Withholding - The withholding rate is 3.07 percent for 2010.

Local Income Tax Withholding - Withholding rates for the following municipalities:

• City of Erie – 1.18 percent withholding rate
• Millcreek Township – 1percent withholding rate
• Fairview Boro and Township – 1percent withholding rate
• Girard Boro and Township – 1percent withholding rate

Pennsylvania Unemployment Compensation (Employer’s Contribution) - The taxable wages base for 2010 will remain at $8,000 per employee. The employer surcharge tax will be 5.8 percent, plus an additional contribution tax of 0.25 percent.

This surcharge and additional contribution tax will be factored into the 2010 contribution rate.

Pennsylvania Unemployment Compensation (Employee’s Contribution) - A .08 percent tax on employees or 80 cents for each $1,000 earned. Employee withholding is not limited to the $8,000 taxable wage base for employer contributions; it applies to all wages paid in 2010.

Federal Unemployment Compensation (FUTA) - The maximum amount of wages subject to federal unemployment will remain at $7,000 for 2010. The gross FUTA rate will remain at 6.20 percent, and the state credit will remain at 5.4 percent. The net FUTA rate for 2010 will be 0.8 percent.

Standard Mileage Rate - Employers that require employees to supply their own autos may reimburse them at a rate that doesn’t exceed $0.50 per mile for employment-connected business mileage during 2010, whether the autos are owned or leased.

Should you have any questions regarding the above payroll tax rates, the following staff members will be pleased to assist you.

Erie:

Linda Eckard - (814) 454-4008, Ext. 8968

Donna Sampson - (814) 454-4008, Ext. 8927

Lisa Donoghue - (814) 454-4008, Ext. 8909

Pittsburgh:

William Adamiak - (412) 364-9395, Ext. 5044

Greensburg:

Lisa Harr - (724) 838-8322, Ext. 1868