Important State and Federal Withholding, Dependent Care, HSA, And Other Changes For 2022

State Unemployment Wage Bases

State unemployment insurance taxes are based on a percentage of an employer’s taxable wages.

The Federal Unemployment Tax Act (FUTA) requires that each state’s taxable wage base must at least equal the FUTA wage base of $7,000 per employee, although most states’ wage bases exceed the required amount.

Some states apply various formulas to determine the taxable wage base, others use a percentage of the state’s average annual wage, and many simply follow the FUTA wage base.

The American Payroll Association has released a chart of State Taxable Wage Bases for 2022, 2021, 2020, and 2019 may be downloaded. States that have changed their wage base for 2022 are highlighted in boldface.

Social Security Wage Base 

The 2022 wage base will be $147,000. The employee and employer match will be 6.2%. The maximum deduction will be $9,114 ($147,000 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. 

Dependent Care Limits

The American Rescue Plan increased the maximum exclusion from gross income under the dependent care program from $5,000 to $10,500 for the tax year 2021 only. 

Health Flexible Spending Arrangements

The dollar limitation on voluntary employee salary reductions for contributions to a health flexible spending arrangement (FSA) is $2,850. 

Health Savings Accounts

HSAs are for eligible individuals in a high deductible health plan. The maximum annual contribution that can be made to an HSA in 2022: 

  • Individual: $3,650 
  • Family: $7,300

Catch-up contributions: Individuals 55 and older can make additional catch-up contributions to an HSA until they are enrolled in Medicare. The additional allowable contribution is $1,000. 

IRA Contribution Limits 

The 2022 contribution limit for Simple IRAs is $14,000. The catch-up contribution for those age 50 or older by December 31, 2022, is $3,000.

401(k), 403(b) and 457 Contribution Limits

The contribution limit for these plans’ employee deferrals is $20,500. The catch-up contribution for those age 50 or older by December 31, 2022, is $6,500. 

Federal Standard Mileage Rates 

The 2022 mileage rates are 58.5 cents per mile for business miles driven.