As a business owner with employees, it's important to stay abreast of the latest payroll regulations which are frequently updated. Keeping up with HR regulatory and payroll compliance changes can help you take care of your employees while ensuring that you stay compliant with the law.
In 2024, there are expected to be several changes to minimum wage and tax rates, which could impact your business.
1. Tax Brackets and Deductions Have Changed
Due to high inflation rates in recent years, the IRS has revised tax brackets. This revision is intended to enable workers to retain more of their earnings at a time when prices are rising. The new tax brackets are:
- 37% for individual single taxpayers with incomes greater than $609,350 ($731,200 for married couples filing jointly)
- 35% for individual incomes over $243,725 ($487,450 for married couples filing jointly)
- 32% for individual incomes over $191,950 ($383,900 for married couples filing jointly)
- 24% for individual incomes over $100,525 (201,050 for married couples filing jointly)
- 22% for individual incomes over $47,150 ($94,300 for married couples filing jointly)
- 12% for individual incomes over $11,600 ($23,200 for married couples filing jointly)
- 10% for individual incomes of $11,600 or less ($23,200 for married couples filing jointly)
In addition, standard deductions have increased for single filers by $750 and by $1,500 for joint filers. All information about tax brackets and deductions can be found on the IRS website.
2. Social Security Taxable Maximum Increases in 2024
Starting from 2024, the maximum earnings that are subject to the Social Security tax will increase. In 2023, the maximum amount was $160,200, which will go up to $168,600 in 2024. The Social Security tax rate is set at 6.2%. This means that the maximum amount your employees can pay for Social Security tax in 2024 is $10,453.20. The change aligns the Social Security Tax with the national wage index.
3. 401(k) Contribution Limits Will Increase in 2024
The IRS has also indicated that there will be a slight increase in the contribution allowances for 401(k) plans. In 2024, the maximum contribution level will be $23,000, which is $500 more than the maximum level in 2023.
4. Changes to HSA and HRA Accounts in 2024
Inflation has affected many things, and that includes HSA and HRA accounts. Inflation adjustments have led to contribution limit increases, so patients are now able to defer more taxes on medical spending. Contribution limits in 2024 are now $4,150 for self-only coverage and $8,300 for family coverage.
The minimum deductible for high-deductible health plans has increased to $1,600 for self-only coverage and $3,200 for family coverage. Annual out-of-pocket expense amounts have also changed, so see the IRS website for more information.
5. State Minimum Wage Increases
A number of states have increased or plan to increase their minimum wage amounts this year. Be sure to double-check your state's minimum wage amounts to see how much you should be paying your employees.
Don't forget to look up any changes to overtime, minimum wage exemptions, and tipped employees as well. In addition, some local minimum wage amounts may also have changed. If you live in a metropolitan area, check with your city governmental authority for more information.
6. Deadline Changes
Tax deadlines can change every year to ensure that the tax deadlines make sense with the current year's calendar. W-2s and 1099s are all due to employees and contractors by January 31, but there are many other deadlines to keep up with. Don't forget to check out the IRS website to ensure that your business complies with deadlines in 2024.
Ensure You’ve Got these Payroll Tax Changes Covered
Payroll tax changes are easy to stay on top of when you're working with a payroll expert. Stay ahead of the curve in 2024 with Payday Payroll's expert compliance support and innovative payroll solutions. Contact us today for a consultation and ensure your business is compliant and efficient.