Payroll Tax Info : Federal Tax Changes : Custom

Medicare Tax Rate

There is no change to the Medicare tax rate for employers and employees. Make sure the field "CUSTOM FIELD #1 NUMBER" contains 1450 (no decimal places). The descriptive field preceding this value should be "MEDICARE %".

Medicare Wage Limit

There is no wage limit for Medicare taxes. Make sure the field "CUSTOM FIELD #2 NUMBER" contains 9999999 (seven 9's). The descriptive field preceding this value should be "MEDI LIMIT".

Additional Medicare Tax Withholding Remains

In addition to withholding Medicare tax at 1.45%, you must withhold a 0.9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. In order to address this, you must make the following changes:
Verify the field "CUSTOM FIELD #3 NUMBER" has a description of "MEDICAREX%" with a value of "900".
Verify the field "CUSTOM FIELD #4 NUMBER" has a description of "MEDIX LIM" with a value of "200000".
Verify the field "CUSTOM FIELD #5 NUMBER" has a description of "ROUNDWH" with a value of "1".

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Reference: Notice 1036 - Early Release Copies of the 2016 Percentage Method Tables for Income Tax Withholding, (Rev December 2015)