Important Payroll Updates for 2023
Happy New Year!
As we embark on another year, there are a few important payroll updates that Arizona employers need to know about for 2023. Here is a brief rundown….
Minimum Wage Increase
Effective 1/1/2023 the Arizona minimum wage increased to $13.85 per hour. Check your pay rates and update as needed. If anyone was missed for this increase for their first paycheck be sure to catch up the amount on the next check or issue an out-of-cycle check.
AZ Unemployment Taxable Wage Base Increase
In addition to increasing unemployment rates substantially (anyone else have zero claims but got hit with a 500% rate increase?!) the taxable wage base increased to $8,000 effective 1/1/23. Previously you paid taxes on the first $7,000 of taxable wages paid to each employee in a year. This year you’ll pay on the first $8,000 of taxable wages.
Arizona’s New Form A-4
Just a reminder that the new A-4 goes into effect this year. Read this blog post to find more information on what actions you and your employees need to take.
Here are a few important federal payroll updates as well….
FICA – Social Security and Medicare
The Social Security wage base has increased to $160,200 for 2023. This means that all taxable wages up to that amount are taxed at the 6.2% rate.
Medicare tax remains at 1.45% of taxable wages up to $200,000. There is no minimum base for Medicare taxes but amounts over $200,000 are taxed at an additional 0.9%.
Retirement Plan Contributions
The maximum amount an employee can defer into a 401(k) plan is $22,500. An employee 50+ years of age can defer an additional $30,000.
The maximum amount an employee can defer into a SIMPLE IRA plan is $15,500. Employees 50+ years of age can defer an additional $19,000.
Employees who claim Exempt on their W-4
If you had any employee turn in a W-4 in 2022 claiming exempt from federal income taxes, they need to furnish you a new form, dated prior to February 15th, to certify that they are still exempt for this calendar year.
If you utilize a payroll service many of the tax related updates will be done automatically; however, be sure to confirm your level of service and understand the items on which you will need to take action.
