The payroll industry is rapidly changing. Advancements in technology, a new tax code, and minimum wage will all have an impact on paychecks. Be on the lookout for these paycheck trends in 2018!
New Tax Code for 2018
The most significant change to paychecks for 2018 is the Tax Cuts and Jobs Act. The new tax code changes the federal corporate tax rate as well as the federal income tax for individuals. For employees, the income tax bracket retains the seven bracket structure but reduces the rate in each bracket. On top of many other changes, supplemental wages, including bonuses are now taxed at a lower rate. This means the vast majority of employees will see a larger paycheck this year!
Taxes on Your Paystub
There are four types of taxes you can expect to see on your paycheck in 2018. They are federal income tax, social security tax, Medicare tax, and state income tax. Note, not all states require an income tax. States that do not collect a state income tax are Washington, Nevada, Wyoming, South Dakota, Texas, and Florida.
Blockchain and Payroll
Blockchain technology has been in the headlines a lot this year. This has everyone asking two questions: What is Blockchain? And what are the practical uses of this technology? The blockchain is a network-to-network chain. The technology acts as a decentralized ledger system, which logs transactions across its network. Once a transaction is logged it is irreversible. Because of this, blockchain promises a new frontier of security and efficiency.
What can we expect? Blockchain has the potential to disrupt many industries, especially payroll and human resources. While the technology implementation is still nascent, employees can expect to see changes in how they get paid and the duration of time before they have access to paychecks.
New Social Security Tax?
The social security wage base is increasing by $1,200 for 2018. The wage base is the maximum amount of earned income upon which employees must pay social security taxes. Employees that earn $128,400 or less will now pay into social security. Earnings greater than the maximum wage base are not subject to social security tax.
New technology has allowed paycheck advances to be an added benefit of an employee-employer relationship. Using the power of mobile financial applications like Even, employees can now get access to wages ahead of their pay date. Employees wonâ€™t need to take out a loan, as they are just accessing wages already earned in their current pay cycle.
State and Local Taxes
It is always smart to stay on top of state and local tax changes. Depending on what state and county you work or live in, you may see slight changes in your gross income on your paycheck. If you want to stay up to date, check out our regularly updated glossary of state and local taxes.
Minimum Wage Tracking
Be on the lookout for minimum wage news this year! Eighteen states began 2018 with higher minimum wages including Alaska, Florida, Minnesota, Montana, Arizona and more. States are always adding new minimum wage laws so make sure to keep an eye on the latest rates.
As always, our paycheck calculators will remain updated with the latest taxes ensuring you get an accurate calculation of your paycheck. If you are a non-exempt employee, try our hourly paycheck calculator. Are you a salaried employee? Check out our salary paycheck calculator. Interested in calculating a bonus or seeing a dual scenario? You can use our bonus or duel scenario calculators.