Tax Changes in 2019

Posted to the Accounting Website on Dec. 11, 2018

Changes to federal tax rules have changed tax withholdings and limits for contributions to retirement funds.

New OASDI Taxable Gross Takes Effect in 2019

The Social Security Administration has announced that the maximum amount of income subject to OASDI—commonly known as Social Security—will increase from $128,400 to $132,900 beginning on Jan. 1, 2019. The OASDI tax rate for employees will remain unchanged at 6.2 percent. The rate for Medicare also remains unchanged at 1.45 percent and is applied to all wages earned in a calendar year. An additional 0.9 percent in Medicare withholding taxes will continue to be deducted on gross earnings in excess of $200,000 in a calendar year.

Retirement Contribution Limits Increase

This year the IRS has increased the maximum employee 403(b) and 457(b) contribution limit to $19,000 per year. The maximum contribution for 2018 was $18,500. The situation is the same with catch-up contributions. Those represent the additional amount of contributions that you can make to a retirement plan if you are age 50 or older. For 2019, the catch-up limit for 403(b) MAC will be $28,000 and the 457(b) MAC limit will be $38,000.

For more information, see the IRS website.

Pretax Transit & Parking Limit Increases

Because of an update to federal tax rules, the University of California’s pretax deduction limit for the value of transit passes and van pool expenses will increase by $5 to $265 per month in 2019. The pretax deduction limit of $265 will also apply for parking expenses and for the purposes of California income tax withholding.

UC Policy G-41: Employee Non-Cash Awards and Other Gifts will be updated to reflect the $265 per-person limit for an employee recognition award of either a one-month transit or parking permit pass after the 30 day notice to the unions has completed.

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