2011 Payroll Tax Rates

January 2011 - The following summary should help you to prepare for the new tax changes effective January 1, 2011.

Federal Income Tax Withholding - Use the Circular E Employer’s Tax Guide (Rev. January, 2011). This publication contains the income tax withholding rates and tables for wages paid beginning January, 2011. Use this publication to determine the proper deposit date for payroll taxes.

Social Security (FICA) Tax - The tax rate for 2011 is 4.2% for the employee and 6.2% for 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 2011 is 1.45% for the employee and also 1.45% for the employer. All 2011 wages are subject to the Medicare tax.

Pennsylvania Income Tax Withholding - The withholding rate is 3.07% for 2011.

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

City of Erie – 1.18 percent withholding rate

Millcreek Township – 1 percent withholding rate

Fairview Boro and Township – 1 percent withholding rate

Girard Boro and Township – 1 percent withholding rate

Pennsylvania Unemployment Compensation (Employer’s Contribution) - The taxable wages base for 2011 will remain at $8,000 per employee. The employer surcharge tax will be 5.8%, plus an additional contribution tax of .65% and an interest factor tax of .44%.

Pennsylvania Unemployment Compensation (Employee’s Contribution) - A .08% 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 2011.

Federal Unemployment Compensation (FUTA) - The maximum amount of wages subject to federal unemployment will remain at $7,000 for 2011. The gross FUTA rate will remain at 6.2%, and the state credit will remain at 5.4% for the period January 1 through June 30, 2011. For the period July 1 through December 31, 2011, the rates will be reduced to 6.0% and 5.1%, respectively. The net FUTA rate for 2011 will be 0.8%.

Standard Mileage Rate - Employers that require employees to supply their own autos may reimburse them at a rate that doesn’t exceed .51 per mile for employment-connected business mileage during 2011, 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, x8968

Donna Sampson - (814) 454-4008, x8927

Lisa Donoghue - (814) 454-4008, x8909

Pittsburgh:

Kari Molnar - (412) 364-9395, x5050

Denise Lemchak - (412) 364-9395, x5057