American Taxpayer Relief Act of 2012

What the American Taxpayer Relief Act of 2012 Means for You

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On January, 1, 2013, the United States Congress passed the American Taxpayer Relief Act, which included several important provisions that impact UMD’s employees.  This is intended to highlight several noteworthy items for you:

  • Immediately, employees will see that the Social Security payroll tax has returned to a rate of 6.2% of pay up to the $113,700 earnings cap.  This payroll tax had been temporarily reduced in 2010 to 4.2% as an economic stimulus measure and expired on 12/31/2012.
  • Employer-provided education assistance (tuition remission) remains tax-exempt for an employee’s undergraduate or graduate courses up to $5,250 a year.  Once the value of the benefit reaches that threshold, to remain tax-exempt, it must be required as a condition of employment, or necessary for the employee to improve/maintain skills in their current position.
  • Existing income tax rates were made permanent for all earners except those with taxable incomes of $400,000 (individual) and $450,000 (household).  Those in the highest bracket will see the marginal tax rate rise to 39.6%. Because of the late date this legislation was passed, new withholding formulas have not yet been implemented by the State of Maryland for those earners.

There are other provisions of the American Taxpayer Relief Act that may have an impact on you, depending on your individual/family tax circumstances.  It is important to be informed, and if you have questions about this new law, UHR recommends you seek the advice of an accountant, financial planner, or tax preparation professional.

For more information on the payroll tax, please contact Payroll Services at 301-405-5665.  Should you have questions on tuition remission, visit the UHR website at, or call Employee Benefits at 305-405-5654.

Happy New Year!

University Human Resources


Last updated: March 5, 2013

Last updated: March 5, 2013