2022 Payroll Updates You Should Know

Focus is your HR partner, here to help you navigate the confusing landscape of payroll and employee administration. There are some important changes coming up in 2022 that could affect your business. Below is a list of the top changes that you should be aware of. Rest assured we are handling everything on our end to ensure these changes are as seamless as possible for you.

General Updates

Minimum Wage and Salary Threshold Updates: 25 states are raising their minimum wage in 2022. To ensure your organization is aware of the latest minimum wage requirements, please check out our breakdown by state and locality here.
S-Corp Shareholders: As a greater than 2% shareholder employee of an S-corporation, any health, disability, or accident insurance premiums paid by the corporation on the shareholder’s behalf must be reported as taxable wages. If you own an S-Corp and you’re making healthcare contributions, please email info@focushr.net so we can get the appropriate information on your W-2.
End of year bonuses and gifts: If you are planning on giving bonuses and/or gifts to your employees, please remember that any bonuses (including gift cards) over $25 must be reported as wages to the employee. If you have any you would like to report, please contact your payroll specialist.
Employee/Owner fringe benefits: Some fringe benefits given to employees and/or owners must be reported as wages. These taxable fringe benefits can include gym memberships, personal use of company automobiles, etc. Please reach out to us if you have any questions about these types of benefits.

Federal Updates

2022 FICA Changes: Starting Jan. 1, 2022, the maximum earnings subject to the Social Security payroll tax will increase by $4,200 to $147,000—up from the $142,800 maximum for 2021. Therefore, the maximum Social Security tax employees and employers will contribute is $9,114.00 each. Medicare continues to have no wage base limit. However, when an employee earns over $200,000, they will be subject to an extra .09% Medicare Tax.
401(k) limits: In 2022, the maximum contributions to traditional and safe harbor plans are as follows:
- Employee (age 49 or younger) = $20,500, up from $19,500 in 2021.
- Employee catch-up (age 50 or older) = $6,500, unchanged from 2021.
- Employee and employer (age 49 or younger) = $61,000, up from $58,000 in 2021.
- Employee and employer (age 50 or older) = $67,500, up from $64,500 in 2021.
- Employees can contribute up to $14,000 to a SIMPLE 401(k) plan, up from $13,500 in 2021.
HSA and HDHP limits:
- In 2022, the maximum contributions to a health savings account are as follows:
  - Employer and employee = $3,650 (self only), $7,300 (family).
  - Catch-up amount (age 55 or older) = $1,000.
- In 2022, the limits for a high-deductible health plan are as follows:
  - Minimum deductibles = $1,400 (self only), $2,800 (family).
  - Maximum out-of-pocket amounts = $7,050 (self only), $14,100 (family).
FSA limits: In 2022, employees can contribute:
- Up to $2,850 to a health flexible spending account, increasing from $2,750 in 2021.
- Up to $5,000 to a dependent care FSA if filing single or jointly, and up to $2,500 if married but filing separately. The American Rescue Plan temporarily raised the dependent care FSA limits in 2021 to $10,500 and $5,250, respectively. These increases do not apply in 2022.
Standard Deduction Changes:
- Single & Married Filing Separately: $12,950
- Married Filing Jointly: $25,900
- Head of Household: $19,400
Commuter benefits limit: In 2022, employees can contribute up to $280 per month for qualified commuter benefits (e.g., mass transit and parking), up from $270 per month in 2021. This limit includes any employer contributions.