The updated tables show the new rates for 2013, which reflect the expiration of the tax cuts in the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA, P.L. 107-16) and in the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA, P.L. 108-27). In addition, employers are advised that they should also begin withholding Social Security tax at the rate of 6.2% of wages paid following the expiration of the temporary two-percentage-point payroll tax cut in effect for 2011 and 2012.

IRS instructs employers that they should start using the new withholding tables and correct the amount of Social Security tax withheld as soon as possible in 2013, but not later than Feb. 15, 2013. For any Social Security tax under-withheld before that date, employers should make the appropriate adjustment in workers’ pay as soon as possible, but not later than Mar. 31, 2013.

Notice 1036, released at the same time as IR 2012-105, contains the percentage method income-tax withholding tables and related information that employers need to implement these changes.

While employers and payroll companies will handle the withholding changes—so workers typically won’t need to take any additional action (such as filling out a new Form W-4)—IRS still urged workers to review their withholding this and every year. If necessary, employees should fill out a new Form W-4 and give it to their employer.

January 7, 2013 12:00 am