PAYROLL TAX HIGHLIGHTS

                YEAR 2008

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Below, we have summarized the major changes, as of this date, which will affect your payroll

 tax calculations effective January 1, 2008.

 

Federal Individual Income Tax

  

New Jersey Individual Tax

Rates remained the same for 2008. Bracket amounts, the standard deductions, and the phase-out of personal exemptions have been adjusted for cost of living increases. The personal exemption for 2008 will be $3,500. (See schedule 1 for tax brackets, rates, standard deductions, and phase out of personal exemptions).

  

New Jersey individual tax brackets remain the same for 2008. The tax rates start at 1.4% with a graduating tax schedule rising to a maximum tax bracket of 8.970% (See schedule 2 for tax brackets and rates).

 

Pennsylvania Individual Tax

 

The Pennsylvania individual income tax withholding rate remains at 3.07% for 2008.

Social Security Tax

  

Philadelphia Wage Tax

Social security tax is broken into two sections, Social Security and Medicare. The following is each section's rate and base for 2008:

  

The withholding rate for Philadelphia City Wage Tax will be reduced, effective January 1, 2008, to 4.219% (0.04219) for residents and 3.7242% (0.037242) for non-residents.
 

Social Security

  

 

Medicare

    

 

Rate

 

Base

 

Maximum Employer

Portion

 

Maximum Employee

Portion

 

6.2%

 

$102,000

 

$6,324.00

 

 

$6,324.00

  

 

1.45%

 

Unlimited

 

Unlimited

 

 

Unlimited

  

Federal Unemployment Tax

Federal Unemployment Tax remains at 6.2% with a maximum state credit of 5.4% for a net tax of .8% (.008) on the first $7,000 of wages per employee.

 

Pennsylvania

The maximum taxable wages for Pennsylvania Unemployment remains at $8,000 per employee. The surcharge on employer contributions will decrease to 5.8% (.58). Also, the employer additional contribution will decrease to 0.25% (.00025). Additionally, the percentage of employee wages required to be withheld as unemployment compensation tax will decrease to .06% (.0006). This .06% tax does not have a wage limit.

  

New Jersey

The maximum taxable wages for New Jersey Unemployment and Disability will increase to $27,700 per employee. The withholdings rate remains the same at 0.925% (.000925). The employee percentage is divided as follows:

7/1/07 - 6/30/08

0.0000% Healthcare Subsidy

0.3825% Unemployment

0.0425% Workforce development

0.5000% Disability

0.925%

 

IMPORTANT REMINDERS

401(k) Limits

 

The maximum employee contributions will remain unchanged at $15,500 for 2008. Please note that this contribution

 is limited to the lesser of $15,500 or the percentage of wages specified in your 401(k) Plan document. The maximum

employee contributions for employees age 50 or older is $20,500 for 2008. The contribution is limited to the lesser of $20,500

 or the percentage of wages specified in your 401(k) Plan document.

 

 

Minimum Hourly Wage

                                        Amount            Effective Date

 

                      Federal          $5.85             July 24, 2007

                      Federal          $6.55             July 24, 2008

                      Federal          $7.25             July 24, 2009

                      New Jersey    $7.15             October 1, 2006

                      Pennsylvania  $7.15             July 1, 2007

                     Pennsylvania   $7.25             July 24, 2009

 

                     PA Small

                     Employers*     $6.65             July 1, 2007

                                           $7.15             July 1, 2008

                                           $7.25             July 24, 2009

*Employers with equivalent of 10 or fewer full-time employees calculated on a 40-hour work week.

 

Who to contact

If you have any questions please contact:

Fred Schutz

Tax Manager

856-722-5300 ext 201

email: fred.schutz@hfco.com

 

The information contained herein is general in nature and is based on authorities that are subject to change. It in not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Haefele, Flanagan & Co., PC to the reader. This material may not be applicable to, or suitable for, the specific circumstances or needs, and may require consideration of non-tax and other tax factors. Contact Haefele, Flanagan & Co. PC prior to taking any action based upon this information. Haefele, Flanagan & Co. PC assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information obtained herein.

FEDERAL PERSONAL INCOME TAX RATES FOR 2007

 

Taxable Income                    Tax Bracket

                               But Not

     Over                     Over

Single Individuals

     

$ -0- -

$ 8,025

10% of the taxable income

8,025 -

32,550

$802.50 plus 15% of the excess over $8,025

32,550 -

78,850

$4,481.25 plus 25% of the excess over $32,550

78,850 -

164,550

$16,056.25 plus 28% of the excess over $78,850

164,550 -

357,700

$40,052.25 plus 33% of the excess over $164,550

357,700 -

Over

$103,791.75 plus 35% of the excess over $357,700

 

Standard Deduction $5,450

Phase out of personal exemptions begins at $159,950

Married Filing Jointly and Surviving Spouses

$ -0- -

$ 16,050

10% of the taxable income

16,050 -

65,100

$1,605 plus 15% of the excess over $16,050

65,100 -

131,450

$8,962.50 plus 25% of the excess over $65,100

131,450 -

200,300

$25,550 plus 28% of the excess over $131,450

200,300 -

357,700

$44,828 plus 33% of the excess over $200,300

357,700 -

Over

$96,770 plus 35% of the excess over $357,700

 

Standard Deduction $10,900

Phase out of personal exemptions begins at $239,950

 

Married Filing Separately

 

$ -0- -

$ 8,025

10% of the taxable income

8,025 -

32,550

$802.50 plus 15% of the excess over $8,025

32,550 -

65,725

$4,481.25 plus 25% of the excess over $32,550

65,725 -

100,150

$12,775 plus 28% of the excess over $65,725

100,150 -

178,850

$22,414 plus 33% of the excess over $100,150

178,850 -

Over

$48,385 plus 35% of the excess over $178,850

 

Standard Deduction $5,450

Phase out of personal exemptions begins at $119,975

 

Head of Household

 

$ -0- -

$ 11,450

10% of the taxable income

11,450 -

43,650

$1,145 plus 15% of the excess over $11,450

43,650 -

112,650

$5,975 plus 25% of the excess over $43,650

112,650 -

182,400

$23,225 plus 28% of the excess over $112,650

182,400 -

357,700

$42,755 plus 33% of the excess over $182,400

357,700 -

Over

$100,604 plus 35% of the excess over $357,700

 

Standard Deduction $8,000

Phase out of personal exemptions begins at $199,950

 

*See Circular E for withholding amounts that should be made through payroll.

 

NEW JERSEY INCOME TAX RATES

 

New Jersey Income Tax Rates for 2008 remain the same as the 2007 Income Tax Rates.

 

FOR MARRIED PEOPLE FILING JOINTLY, HEADS OF HOUSEHOLDS

AND SURVIVING SPOUSES

 

  Taxable Income                                              Tax Rate

 

Not over $20,000

1.4%

$20,001 - $50,000

$280 plus 1.750%

of excess over $20,000

$50,001 - $70,000

$805 plus 2.450%

of excess over $50,000

$70,001 - $80,000

$1,295.50 plus 3.500%

of excess over $70,000

$80,001 - $150,000

$1,645 plus 5.525%

of excess over $80,000

$150,000 - $500,000

$5,512.50 plus 6.370%

of excess over $150,000

Over $500,000

8.97% of excess over $500,000

 

FOR TAXPAYERS WHOSE FILING STATUS IS

SINGLE OR MARRIED PEOPLE FILING SEPARATE RETURNS

AND ESTATES AND TRUSTS THE RATES ARE:

 

Taxable Income                                                Tax Rate

Not over $20,000

1.4%

$20,001 - $35,000

$280 plus 1.750%

of excess over $20,000

$35,001 - $40,000

$542.50 plus 3.500%

of excess over $35,000

$40,001 - $75,000

$717.50 plus 5.525%

of excess over $40,000

$75,000 - $500,000

$2,651.25 plus 6.370%

of excess over $75,000

Over $500,000

8.97% of excess over $500,000