Tax & Accounting Blog

Payroll Rates for 2018

Accounting Firms, Payroll February 2, 2018

It’s time once again to post the federal limits that payroll professionals need — this time, for 2018.

We expect changes to be frequent, and this year may end up with very different results; however, this information is accurate as of the writing date of this article (January 2, 2018).

Also, this year’s limits may change due to the recent passage of the Tax Cuts and Jobs Act — and, in fact, some current tax exempt items could become taxable. We’ll keep you updated on any changes to the rates, so keep watching this blog. You can also consider using Payroll Create-a-Chart or other Thomson Reuters payroll products and resources to stay up to date.

Below are the 2018 limits (as of January 2, 2018), with the 2017 rates alongside for comparison.

2018 rates
Item 2017 2018
Social Security  $127,200 $128,400
 – FICA (6.2%) $7,886.40 $7,960.80
 – Medicare (1.45%) $200,000 $200,000
 – Medicare (2.35%) >$200,000  >$200,000 
     
Domestic worker threshold  $2,000 $2,100
     
Elections workers  $1,800 $1,800
     
Transit passes / van pool / bike  $255 / $255 / $20  $260 / $260 / $20 
     
Parking  $255 $260
     
415(b)(1)(A) defined benefit max  $215,000 $220,000
     
Max. contribution  $54,000 $55,000
     
Education assistance $5,250 $5,250
     
Roth Limits (married; single) $186,000-$196,000; $118,000-$133,000  $189,000-$199,000; $120,000-$135,000 
401(k)  $18,000  $18,500
403(b)  $18,000  $18,500
408(p) simple $12,500  $12,500
     
401(k) catch-up  $6,000 $6,000
     
414(v) catch-up simple  $3,000 $3,000
     
IRA  $5,500-6,500<50 $5,500-$6,500<50
     
Foreign income exclusion  $102,100 $104,100
     
Minimum annual comp 408  $600 $600
     
Adoption exclusion limits  $13,570 $13,840
 – Phase Out Adjusted Gross Income (AGI) $203,540 $207,580
-Total exclusion AGI  $243,540 $247,580
     
Definition of control employee / commuting  $215,000 / $105,000  $220,000 / $110,000 
-Corp officer  $105,000 $110,000
-Earnings test  $215,000 $220,000
     
Definition of highly comp. $120,000 $120,000
 – Key employee top heavy plan $175,000 $175,000
 – Flexible Spending Account (FSA)        $2,600 $2,650
Small Employer HRA (QSEHRA)  $4,950 / $10,000 family  $5,050 / $10,250 family 
Long-term premiums     
<40  $410 $420
40-50 $770 $780
50-60  $1,530 $1,560
60-70  $4,090 $4,160
>70  $5,110 $5,200
     
Limitations     
 – Highly compensated 414 $120,000 $120,000
 – Annual compensation limits    
 – 414, 404, 408 Self-Employee Pension (SEP) $270,000 $275,000
 – Annual compensation limits    
 – 401 Government plans in effect 7/1/93 $400,000 $405,000
     
Health Savings Account (HSA)    
– Annual deduction limit Single/Family  $1,300 / $2,600 $1,350 / $2,700 
 – Maximum out of pocket single/family $6,550 / $13,100  $6,650 / $13,300 
 – Maximum annual contribution single/family $3,400 / $6,750  $3,450 / $6,900 
 – Maximum Annual Catch-Up (55 years old) $1,000 $1,000

Foreign income exclusions
Maximum Foreign Earned Income Exclusion  Housing Limit Base Housing Maximum Foreign Cost Exclusion
2015 $100,800 $30,240 $16,128 $14,112
2016 $101,300 $30,390 $16,208 $14,182
2017 $102,100 $30,630 $16,336 $14,294
2018 $104,100 $31,230 $16,656 $14,574