Philadelphia Wage Tax Rate Update

The Philadelphia Wage Tax Rate was reduced effective July 1, 2013 as follows:

Residents: 3.924% (previously 3.928%)

Non-Residents: 3.495% (previously 3.4985%)

PA Employer W-2 Locality Reporting

Act 32, which changed local earned income tax (EIT) withholding for 2012, also changed the way W-2s are to be prepared. Instead of typing the locality name in box 20, you are now required to list the first 2 digits of the Political Subdivision Code (PSD) where the withholdings were remitted. This will generally be the employer's location. For example, an employer located in New Britain Township (NBT) should list "09" as the locality name instead of "New Britain Township." The PSD code for NBT is 090506. The first two digits - "09" - are what needs to be reported in box 20 on the W-2. Using this coding indicates a Bucks county employer who remitted tax to Keystone Collections Group.

Employer Health Care Mandate Postponed

The Obama Administration has announced that it is postponing the Affordable Care Act's mandatory employer and insurer reporting requirements for one year. As a result, the administration also announced that it will waive the imposition of any employer-shared responsibility penalty payments for 2014. This effectively means that employers with more than 50 employees will not be required to provide health insurance to their employees or face a penalty untl 2015.

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Planning for the 3.8 Percent Medicare Tax on Investment Income

Effective January 1, 2013, the health care reform package (the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010) imposes a new 3.8 percent Medicare contribution tax on the investment income of higher-income individuals.  To find out more, click here to read the article in Dunlap Deductions.

American Taxpayer Relief Act of 2012

After seemingly endless negotiations and down-to-the-wire drama, Congress has passed legislation to avert the tax side of the so-called "fiscal cliff."  The American Taxpayer Relief Act permanently extends the Bush-era tax cuts for lower and moderate income taxpayers, permanently "patches" the alternative minimum tax (AMT), provides for a permanent 40 percent federal estate tax rate, renews many individual, business, and energy tax extenders, and more. In one immediately noticeable effect, the American Taxpayer Relief Act does not extend the 2012 employee-side payroll tax holiday. As a result of the expiration of the payroll tax holiday, everyone who receives a paycheck or self-employment income will see an increase in taxes in 2013.

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2013 Mileage Rates

Effective January 1, 2013, the Standard Mileage Rates are revised as follows:

  • Business Rate = 56.5 cents per mile (up from 55.5 cents)
  • Medical and Moving Rate = 24 cents per mile (up from 23.5 cents)
  • The Charitable Rate remains unchanged at 14 cents