Recent State And Fed Payroll Tax Changes For First Quarter 2024

IRS Issues Standard Mileage Rates For 2024; Mileage Rate Increases To 67 Cents A Mile

WASHINGTON — The Internal Revenue Service issued the 2024 optional standard mileage rates to calculate the deductible costs of operating an automobile for business, charitable, medical, or moving purposes.

Beginning on Jan. 1st of this year, the standard mileage rates for the use of a car (also vans, pickups, or panel trucks) will be:

  • 67 cents per mile driven for business use, up 1.5 cents from 2023.
  • 21 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces, a decrease of 1 cent from 2023.
  • 14 cents per mile driven in service of charitable organizations; the rate is set by statute and remains unchanged from 2023.

These rates apply to electric and hybrid-electric automobiles and gasoline and diesel-powered vehicles.

IRS Announces 2024 COLAs For Transportation Fringe Benefits, FSA Deferrals

For 2024, the amounts that may be excluded from gross income for employer-provided qualified transportation fringe benefits and qualified parking increase to $315 per month ($300 in 2023).

For plan years beginning in 2024, the dollar limitation for voluntary employee salary reductions for contributions to health flexible spending accounts (FSAs) increases to $3,200 ($3,050 in 2023). For cafeteria plans that permit the carryover of unused amounts, the maximum carryover amount increases to $640 ($610 in 2023). 

NOTE: Annual dependent care assistance program (DCAP) reimbursement limits are set by statute and not subject to inflationary adjustments; therefore, they remain at $5,000 for single taxpayers and married couples filing jointly or $2,500 for married people filing separately.

IRS Announces 2024 Retirement Plan Contribution, Benefit Limits

The IRS must adjust dollar limits on benefits and contributions annually under qualified retirement plans for the cost of living.

The contribution limit for employees who participate in 401(k), 403(b), and most 457 plans, as well as the federal government’s Thrift Savings Plan, is increased to $23,000, up from $22,500.

The limit on annual contributions to an IRA increased to $7,000, up from $6,500. The IRS amended the IRA catch‑up contribution limit for individuals aged 50 and over to include an annual cost‑of‑living adjustment but will remain at $1,000 for 2024.

Thirteen Indiana Counties, State Have Tax Rate Changes for 2024

Effective January 1, 2024, the Indiana Department of Revenue revised Departmental Notice No. 1, How to Compute Withholding for State and County Income Tax, to reflect changes to county and state withholding tax rates.

Effective January 1, the following counties have income tax rate increases: 

  • Allen County – the rate increased to 0.0159 from 0.0148
  • Blackford County – the rate increased to 0.025 from 0.015
  • Crawford County – the rate increased to 0.0165 from 0.01 
  • Floyd County – the rate increased to 0.0139 from 0.0135 
  • Franklin County – the rate increased to 0.017 from 0.015
  • Howard County – the rate increased to 0.0195 from 0.0175
  • Jefferson County – the rate increased to 0.0103 from 0.009
  • Ohio County – the rate increased to 0.02 from 0.015
  • Pike County – the rate increased to 0.012 from 0.0075
  • Posey County – the rate increased to 0.0145 from 0.0125 
  • Putnam County – the rate increased to 0.023 from 0.021 
  • Ripley County – the rate increased to 0.0238 from 0.0138
  • Steuben County – the rate increased to 0.0199 from 0.0179

All 92 of Indiana’s counties impose a county income tax on residents of the county and on nonresidents—who do not reside in another Indiana county—with a principal place of business or employment in the county. Each county has one income tax rate (i.e., tax rates are the same for residents and nonresidents). Employers withhold state and county income taxes from employees’ wages.

Also, effective January 1, the Indiana state withholding tax rate decreased to 3.05% from 3.15%. This means the state supplemental wage tax rate decreased to 3.05% from 3.15%.

No California State Disability Insurance (SDI) Taxable Wage Base Limit

Effective January 1, 2024, the California state disability insurance (SDI) employee contribution rate is 1.1%, with no taxable wage base limit. This means there is no cap or limit on the maximum withholding amount for employee contributions to SDI.

For 2023, the SDI wage base is $153,164. The employee contribution rate is 0.9% of annual earnings up to the wage base. This means the maximum contribution is $1,378.48 for 2023 (this includes the paid family leave surcharge).

California, New York, and Virgin Islands Face FUTA Credit Reduction for 2023

California, New York, and the Virgin Islands are subject to a federal unemployment insurance (FUTA) credit reduction in 2023 because they did not repay their FUTA loan balance by November 10, 2023. Connecticut and Illinois repaid their loan balances just before the November 10 cutoff. 

For 2023, California and New York are subject to a credit reduction of 0.6%, and the Virgin Islands are subject to a credit reduction of 3.9%.

The additional FUTA tax must be deposited by the 2023 federal Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return, due January 31, 2024.