2011 Tax Changes

2011 Tax ChangesMinnesota Tax Changes
Minnesota has activated the Federal Loan Interest Assessment part of the State Unemployment rate. This assessment goes into effect when the Minnesota UI Trust Fund borrows federal funds to pay UI benefits. The assessment pays for the interest on the federal loan and is 2% percent of the total MN State Unemployment Tax, (total MN SUI Tax X 2% = assessment).

Federal Tax Changes
Millions of workers will see their take-home pay rise during 2011 because the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 provides a two percentage point payroll tax cut for employees, reducing their Social Security tax withholding rate from 6.2 percent to 4.2 percent of wages paid. This reduced Social Security withholding will have no effect on the employee’s future Social Security benefits.  See Federal Notice 1036 for and the IRS Newswire IR-2010-124 for complete details.

The new law also maintains the income-tax rates that have been in effect in recent years

Quick List of Federal Tax Changes

  • Two percent FICA cut on the employee side along with a two percent reduction in SE tax up to the $106,800 limit
  • Withholding tax rates stay at current levels through 2012
  • Marriage penalty is fixed through 2012 (i.e. no penalty)
  • No itemized deduction phase-out through 2012
  • Capital Gain and Qualified Dividends remain through 2012 (15% rate)
  • AMT patched through 2012
  • Estate Tax $5Mper person, $10M for couples and a top rate of 35%
  • Option to have zero estate tax with carryover basis in 2010 or follow the new rules
  • 100% bonus depreciation deduction for assets placed in service between 9\8\2010 and 12\31\2011 (this means full write-off)
  • 50% bonus depreciation for 2012
  • After 2011 Section 179 set at $125,000
  • Research credit extended though 2011
  • 15 year life for qualified leasehold improvements
  • 15 year life for restaurant buildings and improvements

Important Rates and Limits

  • Social Security Wage Base: $106,800
  • Employee Social Security Rate: 4.2%
  • Employer Social Security Rate: 6.2%
  • 401(k)/403(b) Elective limit: $16,500
  • Catch-up Contributions age 50+: $5,500

Mileage Rates

  • $0.51 Business miles
  • $0.19 Medical or Moving
  • $0.14 Charitable

Provided By:

The Payroll Control Systems Tax Team

Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney, CPA or HR Professional.

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