Navigating Payroll Tax Changes in 2024: What Employers Should Know

  • Article

As we step into a new year, employers face a fresh set of challenges. One of them being payroll taxes. With tax laws evolving, staying informed is essential for businesses to comply with regulations, avoid potential pitfalls and make strategic decisions for their businesses. 

Recent Changes Impacting Payroll 

  1. Social Security Wage Base Increase: One notable change for 2024 is an increase in the Social Security wage base. The wage base, which determines the maximum amount of income subject to Social Security taxes, has been adjusted to reflect inflation. The 2024 Social Security wage base is $168,600, up from the 2023 limit of $160,200.  
  2. New electronic filing requirements for Forms W-2: As we prepare for the 2024 tax season, the new regulation establishes a new threshold for electronic filing of certain returns. Employers must add together the number of returns and the number of Forms W-2 they need to file in a calendar year. If the total equals or exceeds 10, they are required to file all forms electronically. The list of returns that fall under this new rule, can be found on the IRS's website. The new rules apply to tax year 2023 Forms W-2 because they are required to be filed by Jan. 31, 2024. 

Changes on the Horizon 

  1. New Reporting Requirements: The IRS is set to introduce new reporting requirements in 2024, aimed at improving transparency and compliance. Employers will need to furnish additional information on Form W-2, particularly in areas related to fringe benefits and other compensation elements. Staying abreast of these changes is vital for timely and accurate reporting. 
  2. Changes in State Payroll Taxes: Many states are adjusting their payroll tax structures, impacting both employers and employees. Changes may include alterations to income tax rates, wage bases or other state-specific tax provisions. Employers operating in multiple states should monitor these changes to ensure compliance across their workforce. 

Tips to Help 

  1. Stay Informed: Staying informed about payroll tax changes is crucial for businesses to ensure compliance with ever-evolving tax regulations. A reliable payroll provider plays a pivotal role in simplifying this process. These professionals stay on top of the latest tax laws, rates and compliance requirements, relieving businesses of the burden of constant research and updates. 
  2. Employee Communication: Clearly communicate any changes in payroll taxes to your employees. This includes not only informing them of changes in withholding amounts, but also providing resources or guidance on understanding their pay stubs. 
  3. Compliance Audits: Conduct periodic audits of your payroll processes to identify any discrepancies or potential areas of non-compliance. This proactive approach can help you address issues before they escalate. 

Navigating payroll tax changes in 2024 requires a proactive and informed approach from employers. By staying informed, communicating effectively and conducting regular compliance audits, businesses can adapt to these changes seamlessly.  

Want confidence that your payroll taxes are accurately calculated, deposited and tax filings are submitted on time? Our payroll pros are here to show you the way.

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