Payroll Tax Rates & Changes
Find out the latest on payroll tax rates and changes and how they may affect your business so you can maintain compliance.
Tax Provisions
Tax Tables
Standard Deductions
FICA
FUTA
SUTA
The following is a list of scheduled limitation adjustments and tax provision changes effective 2024. We will update this information as additional changes are released. It is important to be familiar with changes in payroll taxes each year to process payroll accurately.
2025 Limitation Adjustments
Updated 11/5/24
Compensation Thresholds
- The limitation on the annual benefit under a defined benefit plan increased from $275,000 to $280,000.
- The compensation limit for defined-contribution plans increased from $69,000 to $70,000.
- The contribution limit for employees who participate in 401(k), 403(b), and most 457 plans and the federal government’s Thrift Savings Plan increased from $23,000 to $23,500.
- The annual compensation limit for qualified plans increased to $350,000. The salary threshold used in the definition of a “key employee” in a top-heavy plan increased to $230,000.
- The salary threshold used in the general definition of a highly compensated employee increased to $160,000.
- The applicable dollar amount for determining the deductible amount of an IRA contribution for taxpayers who are active participants filing a joint return or as a qualifying widow(er) has increased to $126,000.
- The applicable dollar amount for all other taxpayers who are active participants (other than married taxpayers filing separate returns) increased to $79,000. If an individual or the individual’s spouse is an active participant, the applicable dollar amount for a married individual filing a separate return is not subject to an annual cost-of-living adjustment and remains $0.
- The applicable dollar amount for a taxpayer who is not an active participant but whose spouse is an active participant has increased to $236,000.
IRA Thresholds
- The deduction for taxpayers making contributions to a traditional IRA is phased out for single individuals and heads of household who are active participants in a qualified plan (or another specified retirement plan) and have adjusted gross incomes between $79,000 and $89,000. For married couples filing jointly, if the spouse who makes the IRA contribution is an active participant, the income phase-out range is between $126,000 and $146,000. For an IRA contributor who is not an active participant and is married to someone who is an active participant, the deduction is phased out if the couple’s income is between $236,000 and $246,000. For a married individual filing a separate return who is an active participant, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
- The adjusted gross income limitation for determining the maximum Roth IRA contribution for married taxpayers filing a joint return or for taxpayers filing as a qualifying widow(er) increased to $236,000. The adjusted gross income limitation for all other taxpayers (other than married taxpayers filing separate returns) increased to $150,000. The applicable dollar amount for a married individual filing a separate return is not subject to an annual cost-of-living adjustment and remains $0.
- The adjusted gross income phase-out range for taxpayers making contributions to a Roth IRA is $236,000 to $246,000 for married couples filing jointly. For singles and heads of household, the income phase-out range is $150,000 to $165,000. For a married individual filing a separate return, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
Retirement Thresholds
- The dollar limitation for employees 50 and older who participate in an employer plan other than a 401(k) or 408(p) SIMPLE remains $7,500.
- The dollar limitation for employees 50 and older who participate in 401(k) or 408(p) SIMPLE remains $3,500.
- The annual compensation limit for eligible participants in certain governmental plans increased to $520,000. The compensation amount regarding simple employee pensions (SEPSs) is $750.
- The limitation for SIMPLE retirement accounts is $16,500.
- The limitation concerning the qualified gratuitous transfer of qualified employer securities to an employee stock ownership plan remains $60,000.
- The definition of a control employee for fringe-benefit valuation purposes increased to $140,000. The compensation amount increased to $285,000.
- The dollar limitation on premiums paid for a qualifying longevity annuity contract remains $210,000.
- The adjusted gross income limitation for determining the retirement savings contributions credit for married taxpayers filing a joint return is $47,500.
- The adjusted gross income limitation for determining the retirement savings contributions credit for taxpayers filing as head of household is $35,625.
- The adjusted gross income limitation for determining the retirement savings contributions credit for all other taxpayers is $23,750.
- The limit on annual contributions to an individual retirement arrangement remains at $7,000.
2025 Tax Provisions
Updated 11/5/24
- Standard Deductions: The standard deduction for heads of household is $22,500, $15,000 for singles and married couples filing separate returns, and $30,000 for married couples filing jointly.
- Qualified Transportation Fringe Benefit: The monthly limitation for the qualified transportation fringe benefit and for qualified parking increased to $325.
- Health Flexible Spending Cafeteria Plans: The dollar limitation on voluntary employee salary reductions for contributions to health flexible spending arrangements increased to $3,300.
- Medical Savings Accounts: Participants who have self-only coverage the plan must have an annual deductible that is not less than $2,850, but not more than $4,300 .
- Adoption Credit: The adoption tax credit is $17,280.
- Foreign Earned Income Exclusion: The foreign earned income exclusion amount increased to $130,000.
- Personal Exemptions: Remain at 0, as in the previous tax year. The elimination of the personal exemption was a provision in the Tax Cuts and Jobs Act of 2017.
- Itemized Deductions: There is no limitation on itemized deductions for this tax year. The limitation on itemized deductions was eliminated by the Tax Cuts and Jobs Act of 2017.
How APS Can Help
APS’ payroll tax compliance experts handle all of the paperwork and filings, keeping you in compliance:
- Preparation of your quarterly tax payments and filings
- System update of federal tax tables each year
- Year-end payroll processing assistance
The information on this page is subject to change at any time based on tax regulation updates. To stay current on payroll processing issues and payroll tax news. subscribe to the APS Blog.
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