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Sales 855.945.7921  |  Support 888.277.8514  |
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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.
Following is a list of scheduled limitation adjustments and tax provision changes effective 2022. As additional changes are released, we will update this information. It is important to be familiar with changes in payroll taxes each year to accurately process payroll.

2022 Limitation Adjustments

Updated 03/16/22
COMPENSATION THRESHOLDS
  • The limitation on the annual benefit under a defined benefit plan increased from $230,000 to $245,000.
  • The compensation limit for defined-contribution plans increased from $58,000 to $61,000.
  • 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 $19,500 to $20,500.
  • The annual compensation limit for qualified plans increased from $290,000 to $305,000. The salary threshold used in the definition of a “key employee” in a top-heavy plan increased to $200,000.
  • The salary threshold used in the general definition of a highly compensated employee increased to $135,000.
IRA THRESHOLDS
  • 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 from $105,000 to $109,000.
  • The applicable dollar amount for all other taxpayers who are active participants (other than married taxpayers filing separate returns) increased from $66,000 to $68,000. 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 from $198,000 to $204,000.
  • 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 $68,000 and $78,000. For married couples filing jointly, if the spouse who makes the IRA contribution is an active participant, the income phase-out range is between $109,000 and $129,000. 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 $204,000 and $214,000. 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) is $204,000. The adjusted gross income limitation for all other taxpayers (other than married taxpayers filing separate returns) is $129,000. 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 $124,000 to $214,000 for married couples filing jointly. For singles and heads of household, the income phase-out range is $129,000 to $144,000. 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 unchanged at $6,500. The dollar limitation for employees 50 and older who participate in 401(k) or 408(p) SIMPLE remains unchanged at $3,000.
  • The annual compensation limit for eligible participants in certain governmental plans increased from $430,000 to $450,000. The compensation amount regarding simple employee pensions (SEPSs) is $650.
  • The limitation for SIMPLE retirement accounts increased from $13,500 to $14,000.
  • The limitation concerning the qualified gratuitous transfer of qualified employer securities to an employee stock ownership plan increased from $50,000 to $55,000.
  • The definition of a control employee for fringe-benefit valuation purposes increased from $115,000 to $120,000. The compensation amount increased to $245,000.
  • The dollar limitation on premiums paid for a qualifying longevity annuity contract increased to $145,000.
  • The adjusted gross income limitation for determining the retirement savings contributions credit for married taxpayers filing a joint return is $41,000.
  • The adjusted gross income limitation for determining the retirement savings contributions credit for taxpayers filing as head of household is $30,750.
  • The adjusted gross income limitation for determining the retirement savings contributions credit for all other taxpayers is $20,500.
  • The limit on annual contributions to an individual retirement arrangement remains unchanged at $6,000.

2021 Tax Provisions

Updated 03/16/22
  • Adoption Credit: The adoption tax credit is $14,890.
  • Cafeteria Plans: The dollar limitation on voluntary employee salary reductions for contributions to health flexible spending arrangements increased to $2,850.
  • Qualified Transportation Fringe Benefit: The monthly limitation for the qualified transportation fringe benefit and for qualified parking increased to $280.
  • Standard Deductions: The standard deduction for heads of household is $19,400, $12,950 for singles and married couples filing separate returns, and $25,900 for married couples filing jointly.
  • Exempt Amount of Wages, Salary, and Other Income: The dollar amount used to apply to tax levies for years when the personal exemption amount is $4,400. This elimination of the personal exception was a provision in the Tax Cuts and Jobs Act.
  • Foreign Earned Income Exclusion: The foreign earned income exclusion amount increased to $112,000.
  • Medical Savings Accounts: The annual deductible for self-only coverage in a medical savings account increases to not less than $2,450, and not more than $3,700. The maximum out-of-pocket expense amount is $4,950. The annual deductible for family coverage in a medical savings account is $4,950 and not more than $7,400. The out-of-pocket expense amount is $9,050.
  • Qualified Small Employer Health Reimbursement Arrangement: To qualify, the total amount of the payments and reimbursements for any year cannot exceed $5,450 ($11,050 for family coverage).

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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Sales 855.945.7921  |  Support 888.277.8514  |