Tax Rates for 2023
The Employee Social Security rate remains 6.2%, as in 2022. The taxable wage limit for this tax is $160,200. The maximum Social Security tax that an employee will pay in 2023 is $9,932.40.
All wages are still subject to the 1.45% Medicare tax rate. Additionally, wages over $200,000 are subject to an additional 0.9% Medicare tax, for a total Medicare Tax of 2.35% on wages over $200,000.
California State Disability Tax
The State Disability Insurance (SDI) rate decreases to 0.9% in 2023, down from 1.1% in 2022. The California taxable wage limit for this tax is $153,164. The maximum California SDI tax that an employee will pay in 2023 is $1,378.48.
In 2020, the IRS made significant changes to the Form W-4, Employee's Withholding Certificate; it is now very different from any form you completed prior to 2020. New Employees and any employees who need to make withholding changes in 2023 will be required to complete the new form.
Current employees who completed a Form W-4 prior to the changes in 2020 are not required to complete the revised form. However, the IRS does recommend you perform a "paycheck checkup" to see if you need to make adjustments to your current withholding. To conduct the checkup, you can use the IRS's Tax Withholding Estimator. To effectively use the estimator, it is helpful to have a copy of your most recent pay stub and tax return. Please note: if you do not submit a new form, withholding will continue based on your previously submitted form.
If you wish to submit a new Form W-4, you can do so by logging into Employee Self Service in WaveNet. Under the Employee tab, choose Employee Self Service. Then, click on the Payroll tile, and then click on W-4 Tax Information to complete the form.
Before completing the 2023 Form W-4, please read the instructions that are included with the form. You must complete Steps 1 and 5. Steps 2, 3, and 4 are optional, but completing them will help ensure that your federal income tax withholding will more accurately match your tax liability. Step 1 is for your personal information; Step 2 is for households with multiple jobs; Step 3 is used to claim tax credits for dependents; Step 4 is for other adjustments (additional income such as interest and dividends, itemized deductions that exceed the standard deduction, and extra tax you want withheld); and Step 5 is where you sign the form.
The IRS takes your privacy seriously and suggests that if you are worried about reporting income from multiple jobs in Step 2 or other income in Step 4(a), you can check the box in Step 2(c) or, enter an additional withholding amount in Step 4(c). To determine the additional withholding amount, you can use the withholding estimator.
The IRS has also published Frequently Asked Questions that you may find helpful as you complete the form.
Please keep in mind Pepperdine University cannot provide personal tax advice. You are encouraged to consult with your personal tax advisor for specific questions on the form, or information on how the recent tax changes might impact your individual tax filings or withholding elections.