ASU employees' Jan. 11 pay stubs reflect 2013 tax changes

Legislation recently was signed into law that continues many of the tax provisions that were in effect during calendar year 2012. However, since no action was taken to continue the temporary reduction in the employee's portion of the Social Security (FICA) tax, this rate reverts to 6.2% for calendar year 2013. This is a 2% increase from the temporary rate of 4.2% which was in effect for calendar years 2011 and 2012.

The increase in the employee’s FICA rates will be effective for the Jan. 11, 2013 paychecks and will result in a reduction in net pay for most employees.

Other calendar year 2013 payroll-related tax provisions in this legislation include:

• The same personal income tax withholding rate will be used for most employees as was used in calendar 2012.

• A new income tax withholding rate of 39.6% was established for the highest withholding level. Adjusted gross income thresholds for the new rate are $400,000 for single filers, $425,000 for head-of household filers, and $450,000 for married taxpayers filing jointly.

• Graduate level tuition waivers used by employees are not subject to tax withholding up to $5,250. This continues the exemption that was in place for prior years. Graduate waivers in excess of $5,250 used by the employee (where the employee is the student) will be taxed, as well as the total value of graduate waivers used by the employee’s spouse or dependent(s). There is no change in this treatment from prior years. ASU employees with graduate waivers subject to tax will be notified through their ASU email account about the timing of the tax withholding.

If you have any questions or concerns, please contact the Employee Service Center: 855.278.5081 or hresc@asu.edu.