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Understand payroll tax wage bases and limits

by Intuit•17• Updated 1 month ago

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
  • Medicare
  • 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.

You don't need to do anything with these products. Limits are updated for you automatically.

While you can't personally modify wage base limits, you do need to update them every year if you use QuickBooks Desktop.

Wage base limits are updated by the tax table. To update the wage base limit see download the latest payroll updates.

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.

Tax typeEmployer rateEmployee rateWage base limit
Social Security6.2%6.2%$176,100.00
Medicare1.45%1.45%Varies
Additional Medicare1.45%2.35%Varies
FUTA0.6%N/A$7000.00

Check out SSA 2025 Fact Sheet for Social Security information.

Note: Employees are subject to additional medicare withholding of 0.9% for a total rate of 2.35% if they reach the wage limit for their filing status. See the IRS FAQ for more information.

Tax typeEmployer rateEmployee rateWage base limit
Social Security6.2%6.2%$168,600.00
Medicare1.45%1.45%Varies
Additional Medicare1.45%2.35%Varies
FUTA0.6%N/A$7000.00

Check out SSA 2024 Fact Sheet for Social Security information.

Note: Employees are subject to additional medicare withholding of 0.9% for a total rate of 2.35% if they reach the wage base limit for their filing status. See the IRS FAQ for more information.

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.

  1. Go to Reports, then Standard.
  2. In the Payroll section, select Payroll Tax and Wage Summary or search it directly from the search field.
  3. From the dropdown menu, select This Year, then Apply.
  4. Select the tax type you want to see the wage base for.
  1. Go to Reports.
  2. Select Employees & Payroll.
  3. Select Payroll Detail Review.
  4. From the Dates ▼ drop-down menu, select This Calendar Year.
  5. Select Refresh.
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