Social Security (FICA) Tax for Employees
The Social Security Administration (SSA) has announced that the Social Security taxable wage base for 2025 will increase from 2024 ($168,600) to 2025 ($176,100). The employer’s FICA tax rate will hold steady at 7.65% for 2025 and the employee social security portion of the FICA tax rate will remain at 6.20% for all wages up to and including $176,100. The employee Medicare portion of the FICA tax rate will be 1.45% for all wages up to and including $200,000. The employee Medicare portion of the FICA
tax rate will be 2.35% on all wages earned in excess of $200,000.
Medicare (Hospital Insurance) Tax for Certain Employees
The Medicare (Hospital Insurance) Tax, which is the only Social Security tax applicable to some University of Maryland and certain State Police employees, shall apply to every dollar of FICA taxable earnings in 2025. The Medicare (Hospital Insurance) remains the same as 2021. See explanation on Page l under Medicare tax rates.
State Withholding Tax Changes
The tax rates and rate brackets which became effective for all tax years beginning after December 31, 2011, as listed below, are unchanged for 2025.
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Maryland County Income Tax Withholding
For tax year 2025, the local rates for some counties changed. Note: Nonresident local tax rate is 2.25%. Central Payroll Bureau is required to tax at maximum local rate of 3.20% absent of employee submitted address data on Form W-4 and/or MW507. When this occurs, the county code on the employee’s pay stubs will reflect HW for Howard County.
The “Military Spouses Residency Relief Act” remains
This act amended the “Service Members Civil Relief Act” so that exemption from Maryland income tax is applicable if the following three conditions are met:
a. Your spouse is a member of the armed forces present in Maryland in compliance with military orders
b. You are present in Maryland solely to be with your spouse
c. You maintain your domicile in another state
If you claim exemption under this Act, you must complete form MW507M and attach a copy of your spousal military identification card in addition to submitting form MW507.
Federal Withholding Tax Changes
The Federal income tax withholding rates will change effective January 1, 2025
· To view the Federal Tax Tables, visit our Web site at: https://marylandtaxes.gov/statepayroll/employees-current-memos.php
Click on “2025 Federal Income Tax Withholding information”
Annual Wage and Tax Statement (Form W-2) for 2024
The Central Payroll Bureau issued laser-printed annual Wage & Tax Statements (Form W-2) on January 27, 2025. Maryland State employees who had signed up to receive the electronic only W-2 version before December 17th, had access to their 2024 W-2s as of January 19, 2025 by logging on to Central Payroll Bureau’s POSC portal. We encourage employees to sign up for electronic only option that gives you early access to your W-2 in secured environment.
Three copies of the W-2 statement are provided for use with Federal and State returns plus a copy for the employee to retain. Additional copies are available to the employee or agency payroll personnel via our web site home page, menu option POSC, throughout the year beginning January 31st 2025.
Maryland Electronic Filing Program
Maryland Income Tax returns can be filed for “free” using “iFile”. For information on iFile visit the Comptroller’s web site at: www.marylandtaxes.gov or call: 1-800-MD-TAXES Individuals can email their state tax questions to: taxhelp@marylandtaxes.gov
Explanation of the W-2
Our web site offers a detailed explanation of the W-2 which can be downloaded for employees who need assistance in understanding the difference between their year-to-date earnings shown on the last pay stub (or “stubs” if the employee worked for more than one agency during the year) and the taxable wages shown on their Form W-2. The “Your 2024 W-2, What You Need to Know” information can be accessed from our home page:
https://www.marylandtaxes.gov/divisions/cpb.php
Click on “Employees, W2’s”
Click on “Explanation of Your W2”
Request for Duplicate W-2
Duplicate W-2’s may be requested via phone starting on February 15, 2025. Current available request lines are: 410-260-7964 (local) and 1-888-674-0019 (toll free in Maryland). Requests taken by phone are batched and processed on a weekly cycle. For faster service, employees are encouraged to download a copy using the POSC (Payroll Online Service Center) application, located on the Central Payroll Bureau Web Site: https://www.marylandtaxes.gov/statepayroll/online-services.php
State Tax Return Requirements
Employee contributions to any of the following retirement or pension systems will be noted on the first line in box 14 of the W-2 labeled as “STPICKUP”. If an employee is due a refund of their Maryland taxes, failure to add the “State pickup amount” on line 3 of the 502 form or line 19 of the 505 form Maryland state tax returns can result in the refund being delayed. This is an additional modification required because the “state pickup amount” is only sheltered for Federal income tax purposes and is fully
taxable for the State income tax and Social Security (FICA) purposes.
Maryland Charities Campaign Deduction
The Voluntary deductions for the Maryland Charities Campaign, which were solicited in the Fall of 2024, will be effective starting with the Regular Payroll pay period ending January 7, 2025, paid on January 15, 2025 (the corresponding University of Maryland pay period ending is December 28, 2024, paid on January 3, 2025, and Contract pay period ending is December 31, 2024 and paid on January 8, 2025). The payroll deductions will continue for 26 pays.
Unemployment Insurance Premium
The Unemployment Insurance Premium subsidy rate effective for the FY2025 is 0.14%. Unemployment Insurance Wages exclude cafeteria plans and dependent and health care plans.
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