2019 Payroll Rate Changes

A new year means new payroll tax rates, wage bases, and minimum wage rates. Below are some highlights of what to expect in 2019.

Social Security: The IRS announced the Social Security wage base will increase to $132,900 for 2019. This is a $4,500 increase from 2018's wage base of $128,400. Employers will pay an additional $279 in social security tax for employees who earn $132,900 or more each year.

Federal Mileage Rate: The 2019 federal mileage rate will be 58 cents per mile. This is a 3.5 cent increase from the 2018 rate of 54.5 cents per mile. The federal mileage rate is the recommended reimbursement rate for employees who use their personal car for business purposes, such as driving between office locations or driving from the office to client locations.

Oregon Unemployment: Oregon's wage base for unemployment tax will increase to $40,600 in 2019, up from $39,300 in 2018. Starting in November, tax rate notices were sent to each employer with their personalized 2019 tax rate. Oregon also announced it will increase the special payroll tax offset to 0.12% for first quarter 2019 only. The tax offset will return to the current rate of 0.09% for the final three quarters of 2019. The tax offset does not affect the amount of taxes employers pay, however it is reported on the Form OQ so employers will want to ensure their payroll systems are updated to reflect the new rate.

Oregon Tri-Met Transit: The Tri-Met transit tax rate will increase to .7637% for 2019. This is a .01% increase from the 2018 rate of .7537%. The Tri-Met transit tax applies to work performed in the Tri-Met Transit District, even if the employer's primary location is outside of the transit district.

Washington Minimum Wage: The Washington minimum wage will increase to $12.00. The new rate is applicable for wages earned after January 1, 2019. Hours worked prior to January 1, 2019 but paid to employees after January 1, 2019 can be paid at the 2018 minimum wage rate of $11.50. Employees working in Tacoma, Sea-Tac, and Seattle are subject to the higher minimum wage of those municipalities. For 2019, Tacoma's minimum wage increases to $12.35 and Sea-Tac's increases to $16.09. Seattle has 2 tiers based on number of employees. Small employers with fewer than 500 employees must pay a minimum of $15.00 per hour. Up to $3.00 per hour of that rate can be employer paid medical benefits or tips. Employers with 500 or more employees must pay a minimum of $16.00 per hour. Unlike small employers, medical benefits and tips can not be used to arrive at this rate of pay.

Washington Unemployment: Washington unemployment wage base will increase to $49,800 in 2019, up from $47,300 in 2018. Starting in November, tax rate notices were sent to each employer with their personalized 2019 tax rate.