June/July 2006 Payroll & Tax News

Alabama interest rate increases for third quarter 2006
The interest rate on underpayments and overpayments for the state of Alabama has been increased from 7% to 8% for the third quarter of 2006.

California interest rates increase for second half of 2006
From July 1, 2006 through December 31, 2006, the interest rate for personal income tax underpayment will increase from 6% to 7%.

Delaware minimum wage increase
The state of Delaware will be increasing its minimum wage rate to $6.65 per hour, effective January 1, 2007 as part of a two-part wage increase. The second part will take effect January 1, 2008, increasing the rate to $7.15 per hour.

Pennsylvania minimum wage increase
The state of Pennsylvania will be increasing its minimum wage rate to $6.25 per hour, effective January 1, 2007, and to $7.15 per hour, effective July 1, 2007.

Social Security Announces Wage Base and Rates for 2006
The Social Security Administration (SSA) announced October 14, 2005 that the 2006 Social Security wage base will be $94,200 which represents an increase of $4,200 from the wage base of $90,000 for 2005. There is no limit to the wages subject to Medicare tax.

The FICA tax rate of 7.65 (6.2 - Social Security and 1.45 - Medicare) remains unchanged for 2006.

This change is effective January 1, 2006.

Additional information regarding the Cost of Living Adjustment for 2006 is available on the Social Security Administration Web site: www.ssa.gov/employer.

Indiana announces county tax rates, effective July 1, 2006
The Indiana Department of Revenue has released an updated list of county tax rates in Departmental Notice #1, effective July 1, 2006. The county taxes that may apply include the County Adjusted Gross Income Tax (CAGIT), the County Option Income Tax (COIT), or the County Economic Development Tax (CEDIT).

For a complete listing of Indiana counties and rates, please click the following link to see Indiana Departmental Notice #1: http://www.in.gov/dor/reference/notices/pdfs/dn01.pdf