Learn about federal and state payroll tax wage bases and limits and how it may affect your paychecks and tax payments.
Stay on top of your payroll wage bases and limits for federal or state taxes with QuickBooks payroll product.
In this article, we’ll help you understand wage bases and limits and how to update them for:
- Social Security
- Federal Income Tax
- State Income Tax
- State Unemployment Insurance
Understand annual wage base limits
A wage base limit is a per-employee cap on the earnings that are taxable. Once an employee reaches the cap, taxes may stop or increase.
Note: Taxes will start calculating again if your state or the federal government changes the wage base limit. Also, if your employee has more than one job, wage base limits are per employee, per employer, per year.
How to update wage base limits
|Note: Not sure which payroll service you have? Here's how to find your payroll service.
See wage bases and limits (for reference)
Federal Income Tax is based on the employee. See IRS Publication 15 (Circular E) for calculations.
Note: Employees and employers have separate wage base limits for Social Security and Medicare taxes.
State wage bases and limits vary for State Income Tax and State Unemployment Insurance. For information about state taxes, visit your state tax agency's official website.
How to see your employee wage base limits
This report shows detailed information about how QuickBooks calculates tax amounts on employee paychecks and the wage base limit for each employee for each tax.