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2017 Payroll Changes

CPAs & Business Consultants

Christine Porras
Christine Porras, CPP Payroll Supervisor CPAs & Business Consultants

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Paying people used to be simple. More and more federal and state regulations have complicated the payroll process. Important changes in 2017 include the State of Michigan minimum wage increase to $8.90 per hour for wages earned starting January 1, 2017.

Following are payroll changes for 2017.    

Social Security Wage Base. The 2017 wage base will be $127,200. The employee and employer match will be 6.2%. The maximum deduction will be $7,886.40 ($127,200 x 6.2%).

Medicare Tax. As in prior years, there is no limit to the wages subject to the Medicare Tax; therefore, all covered wages are still subject to the 1.45% tax. Wages paid in excess of $200,000 will be subject to an extra 0.9% Medicare tax that will be withheld only from employees’ wages.

Health Flexible Spending Arrangements. The dollar limitation on voluntary employee salary reductions for contributions to a health flexible spending arrangement (FSA) is $2,600.

Medical Savings Accounts. A high-deductible health plan is a plan with an annual deductible of $2,250-$3,350 for individual coverage and $4,500-$6,750 for family coverage.

IRA Contribution Limits. The 2017 contribution limit for Simple IRAs is $12,500. The catch-up contribution for those age 50 or older by December 31, 2017, is $3,000.

401(k), 403(b) and 457 Contribution Limits. The contribution limit for these plans’ employee deferrals is $18,000. The catch-up contribution for those age 50 or older by December 31, 2017, is $6,000.

Federal Standard Mileage Rates. The 2017 mileage rates are 53.5 cents per mile for business miles driven, 17 cents per mile for medical or moving purposes and 14 cents per mile driven in service of charitable organizations. 

Dependent Care Limits. The maximum exclusion from gross income under a dependent care program is $5,000 for an individual or a married couple filing jointly.

Learn more about the other important upcoming changes by viewing our 2017 Payroll Planning Brief.

Updated December 14, 2016

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