Social Security Withholding Maximum
For the second year in a row, the maximum amount of wages considered for Social Security withholding did not change. The maximum Social Security wages in 2011 is $106,800, the same as for 2009 and 2010. The Social Security Administration says the amount was kept the same by law, because the cost of living indicators did not trigger an increase in benefits for 2011.
This change does not affect Medicare, which has no maximum deduction. The withholding rate for Social Security remains at 6.2 percent, and the Medicare rate continues at 1.45 percent, for a total deduction for each employee of 7.65 percent.
IRS Standard Mileage Rates
The IRS increased the standard mileage rates for 2011 for business and medical/moving driving, but not for driving for charities:
- 51 cents per mile for business miles
- 19 cents per mile for medical or moving purposes
- 14 cents per mile in service of charitable organizations.
Business Asset Depreciation Changes
Under the Tax Relief Act enacted in December 2010, several key depreciation changes were kept in place or increased for 2011:
- The Section 179 depreciation limit is $500,000 on assets purchased and put into service in 2011.
- The bonus depreciation amount for business assets purchased in 2011 is 100%.
Backup Withholding Rate The backup withholding rate for withholding income taxes from independent contractors (those to whom you give 1099s, not W-2s)is remaining at 28% for 2011.
