Taxability of Graduate Tuition Waivers: Section 127 of the Federal Tax Code, which allows up to $5,250 of graduate tuition to be waived tax free, has been made permanent. This means that employees taking advantage of the College’s tuition waiver for graduate courses will continue to be taxed only when the calendar year cumulative tuition waiver total exceeds $5,250. Please note that undergraduate tuition waivers remain tax free. If you have questions regarding the tax treatment of tuition waivers, please feel free to contact the Payroll Office.
Social Security (FICA) Tax Rates: As previously reported, the FICA tax rate has been returned to the rate of 6.2% from the reduced rate of 4.2% (reduced for two years as part of the Stimulus Package). The affect of this change will be to decrease net pay by 2.0% each pay period. For example, an individual with an annual salary of $60,000 would experience a decrease of $50.00 per pay period.
Federal Income Tax Rates: Income tax rates changed slightly to decrease tax withholding for employees making less than $400,000 (approximately $5-$10 per paycheck). Individuals making more than $400,000 (or couples making more than $450,000) per year will experience an increase in their tax rate and annual liability.