New Payroll Tax Laws Coming into Effect in 2024
As the tax year 2023 draws to a close, many new regulations have been enacted that will go into effect in calendar year 2024. The following is a concise description of the federal, state, and local updates that will impact employer payroll taxes.
Federal Updates
The Social Security Administration (SSA) announced the Social Security wage base limit would increase to $168,600 for the tax year2024. This is an increase of $8,400 from $160,200, in 2023.
However, theSocial Security and Medicare tax rates for tax year 2024 will remain unchanged. The Social Security tax rate remains at 6.2% for 2024 up to the Social Security wage base limit. The maximum Social Security tax employees and employers will each pay in 2024is $10,453. This is an increase of $520.80 from tax year 2023.
The Medicare tax rate for tax year 2024 remains at 1.45% and applies to all covered earnings for employees and employers. There is no wage base limitfor Medicare, but if an individual's earned income exceeds $200,000 ($250,000 for married couples filing jointly), the excess income amount is subject to an additional Medicare tax rate of 0.9%.
Internal Revenue Services (IRS) Commissioner Danny Werfel ordered the immediate pause on processing new employee retention credit(ERC) claims, beginning September 14, to run through at least December 31, 2023, due to concerns about fraudulentERC claims. The IRS has announced its heightened scrutiny of claims submitted before September 14, 2023. They anticipate that the processing time for ERC claims, which typically took 90 days, now extends to 180 days.
Upcoming Payroll Regulations
The following regulations go into effectduring tax year 2024 require employers and employees to staycompliant with state agencies.
Alabama Overtime Pay Exemption
- Beginning January 1, 2024, through June 30, 2025, Alabama overtime wages should be excluded after any pretax deductions.
Maryland Paid Family and Medical Leave
- On May 3, 2023, Maryland’s Governor signed SB 0828into law, which modifies certain provisions within the law and delays the effective date of payroll contributions and benefit payments.
- The new law prohibits thetotal rate of contributions from exceeding 1.2% of an employee's wage, and implements the following delays.
- Delays the payroll contribution collections date from October 1, 2023, to October 1, 2024.
- Delays the benefits payments from January 1, 2025, to January 1, 2026.
Vermont Childcare Tax
- Effective July 1, 2024, Vermont requires employers make contributions for a new state payroll tax for the Childcare Financial Assistance Program.
States with New Income Tax Withholding Calculations for Tax Year 2024
Name | Agency resource |
Arkansas | |
California | |
Colorado | |
Connecticut | |
Georgia | |
Iowa | |
Kentucky | |
Maine | |
Michigan | |
Minnesota | |
Missouri | |
Mississippi | |
Montana | |
North Carolina | |
Nebraska | |
New Mexico | |
Oklahoma | |
Oregon | |
Rhode Island | |
South Carolina | |
Vermont |
State Minimum Wage Rates Effective January 1, 2024
Jurisdiction | 2024 Minimum Wage | 2023 Minimum Wage | Jurisdiction | 2024 Minimum Wage | 2023 Minimum Wage |
Alabama | $7.25 | $7.25 | Missouri | $12.30 | $12.00 |
Alaska | $11.73 | $10.85 | Montana | $10.30 | $9.95 |
Arizona | $14.35 | $13.85 | Nebraska | $12.00 | $10.50 |
Arkansas | $11.00 | $11.00 | Nevada | $11.25, $10.25 w/ healthbenefits | $10.25, $9.50 w/ healthbenefits |
California | $16.00 | $15.50 | New Hampshire | $7.25 | $7.25 |
Colorado | $14.42 | $13.65 | New Jersey | $15.13 (large employer) &$13.73 (small employer) | $14.13 (large employer) &$12.93 (small employer) |
Connecticut | $15.69 | $14.00 | New Mexico | $12.00 | $12.00 |
Delaware | $13.25 | $11.75 | New York | $16.00New York City, Nassau, Suffolk, & Westchester counties; the rest of the state:15.00 | $15.00 per hour in New York City; Long Island & Westchester. Remainder of New York, $14.20 per hour |
District of Columbia | $17.00 | $16.10 | North Carolina | $7.25 | $7.25 |
Federal | $7.25 | $7.25 | North Dakota | $7.25 | $7.25 |
Florida | $12.00 | $11.00 | Ohio | $10.45 | $10.10 |
Georgia | $7.25 | $7.25 | Oklahoma | $7.25 | $7.25 |
Hawaii | $14.00 | $12.00 | Oregon | 14.20 | $13.50 |
Idaho | $7.25 | $7.25 | Pennsylvania | $7.25 | $7.25 |
Illinois | $14.00 | $13.00 | Rhode Island | $14.00 | $13.00 |
Indiana | $7.25 | $7.25 | South Carolina | $7.25 | $7.25 |
Iowa | $7.25 | $7.25 | South Dakota | $11.20 | $10.80 |
Kansas | $7.25 | $7.25 | Tennessee | $7.25 | $7.25 |
Kentucky | $7.25 | $7.25 | Texas | $7.25 | $7.25 |
Louisiana | $7.25 | $7.25 | Utah | $7.25 | $7.25 |
Maine | $14.15 | $13.80 | Vermont | $13.67 | $13.18 |
Maryland | $15.00 | $13.25 for 15 or more employees. $12.80 for 14 or fewer empoyees | Virginia | $12.00 | $12.00 |
Massachusetts | $15.00 | $15.00 | Washington | $16.28 | $15.74 |
Michigan | $10.33 | $10.10 | West Virginia | $8.75 | $8.75 |
Minnesota | $10.85(large employer) &$8.85(small employer) | $10.59 (large employer) & $8.63 (small employer) | Wisconsin | $7.25 | $7.25 |
Mississippi | $7.25 | $7.25 | Wyoming | $5.15 | $5.15 |
State Unemployment Insurance (SUI) Wage Base LimitsEffective January 1, 2024
Jurisdiction | 2024 Taxable Wage Base | 2023 Taxable Wage base | Jurisdiction | 2024 Taxable Wage Base | 2023 Taxable Wage base |
Alabama | $8,000 | $8,000 | Montana | $43,000 | $40,500 |
Alaska | $49,700 | $47,100 | Nebraska | $9,000 | $9,000 |
Arizona | $8,000 | $8,000 | Nevada | $40,600 | $40,100 |
Arkansas | $7,000 | $7,000 | New Hampshire | $14,000 | $14,000 |
California | $7,000 | $7,000 | New Jersey | $42,300 | $41,100 |
California SDI | No Limit | $153,564 | New Jersey TDI EE | $161,400 | $156,800 |
Colorado | $23,800 | $20,400 | New Mexico | $30,100 | $30,100 |
Connecticut | $25,000 | $15,000 | New York | $12,500 | $12,300 |
Delaware | $10,500 | $10,500 | North Carolina | $29,600 | $29,600 |
District of Columbia | $9,000 | $9,000 | North Dakota | $43,800 | $40,800 |
Federal | $168,600 | $160,200 | Ohio | $9,000 | $9,000 |
Florida | $7,000 | $7,000 | Oklahoma | $25,700 | $25,700 |
Georgia | $9,500 | $9,500 | Oregon | $52,800 | $50,900 |
Hawaii | $59,100 | $56,700 | Pennsylvania | $10,000 | $10,000 |
Idaho | $53,500 | $49,900 | Puerto Rico | $7,000 | $7,000 |
Illinois | $13,590 | $13,271 | Rhode Island | $28,200 | $28,200 |
Indiana | $9,500 | $9,500 | South Carolina | $14,000 | $14,000 |
Iowa | $38,200 | $36,100 | South Dakota | $15,000 | $15,000 |
Kansas | $14,000 | $14,000 | Tennessee | $7,000 | $7,000 |
Kentucky | $11,400 | $11,100 | Texas | $9,000 | $9,000 |
Louisiana | $7,700 | $7,700 | Utah | $47,000 | $44,800 |
Maine | $12,000 | $12,000 | Vermont | $14,300 | $13,500 |
Maryland | $8,500 | $8,500 | Virgin Island | $30,800 | $30,800 |
Massachusetts | $15,000 | $15,000 | Virginia | $8,000 | $8,000 |
Michigan | $9,500 | $9,500 | Washington | $68,500 | $67,600 |
Minnesota | $42,000 | $40,000 | West Virginia | $9,521 | $9,000 |
Mississippi | $14,000 | $14,000 | Wisconsin | $14,000 | $14,000 |
Missouri | $10,000 | $10,500 | Wyoming | $30,900 | $29,100 |
Local Minimum Wage Rates Effective January 1, 2024
State | Locality | Minimum Wage Rate | State | Locality | Minimum Wage Rate |
Arizona | Flagstaff | $17.40 | California | San Jose | $17.55 |
Tucson | $14.35 | San Mateo | $17.35 | ||
California | Belmont | $17.35 | Santa Clara | $17.75 | |
Cupertino | $17.75 | Santa Rosa | $17.45 | ||
Daly City | $16.62 | Sonoma | $17.60 (Large Employer) $16.56 (Small Employer) | ||
El Cerrito | $17.92 | South San Francisco | $17.25 | ||
East Palo Alto | $17.10 | Sunnyvale | $18.55 | ||
Foster City | $17.00 | Colorado | Boulder County | $15.69 | |
Half Moon Bay | $17.01 | Denver | $18.29 | ||
Hayward | $16.90 (Larger Employer); $16 (Small Employer) | Edgewater | $15.02 | ||
Los Altos | $17.75 | Maine | Portland | $15.00 | |
Menlo Park | $16.70 | New Mexico | Albuquerque | $12.00 | |
Mountain View | $18.75 | Las Cruces | $12.36 | ||
Novato | $16.86 | New York | Nassau County | $16.00 | |
Oakland | $16.50 | New York City | $16.00 | ||
Palo Alto | $17.80 | Suffolk County | $16.00 | ||
Petaluma | $17.45 | Westchester County | $16.00 | ||
Redwood City | $17.70 | Washington | SeaTec | $19.71 | |
Richmond | $17.20 | Seattle | $19.97 | ||
San Carlos | $16.87 | Tukwila | $20.29 (Large Employer) and $18.29 (Mid-Size Employer) |
Paid Family and Medical Leave (PFML) Rates EffectiveJanuary 1, 2024
Jurisdiction | 2024 Rate | Paid By |
California | 1.1% | Employees |
Colorado | 0.9% | Employer & Employee
|
Connecticut | 0.5% | Employees |
District of Columbia | 0.26% | Employers |
Massachusetts | 0.88%
| Employer & Employees
|
New Jersey | 0.09% | Employees |
New York | 0.373% | Employees |
Oregon | 1.00% | Employers & Employee (split 1.00% up to the wage gap)
|
Rhode Island | 1.2% | Employees |
Washington | 0.74% | Employers & Employees |
Thank you for choosing Paylocity as your Payroll Tax and HCM partner.
This information is provided as a courtesy, may change and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney or Advisor.
