IRS Boosts Standard Mileage Rate to 65.5 cents
Effective January 1, the IRS increased the standard employee mileage reimbursement rate for use of personal vehicles to 65.5 cents. There are no Federal or Ohio laws that require employers to reimburse at this rate or at all, but is considered a best practice for employee fairness engagement, and retention. Mileage reimbursement is federally required when failure to reimburse would decrease an employee’s net wages below minimum wage; otherwise, businesses could be open to lawsuits and financial penalties. Mileage reimbursement is tax-deductible for employers and independent contractors. Additionally, it is not considered income to an employee and therefore is nontaxable. Mileage reimbursement should not be run through payroll, but as a separate expense reimbursement. Employees who are not reimbursed up to the Federal guideline may claim a tax deduction. However their total non-reimbursed expenses would need to exceed the standard deduction before they would likely see a net benefit. All tax related questions should be discussed with an Accoutant.
Maximum contributions increase for 401k and HSA Benefits
Due to high rates of inflation, the IRS approved higher than normal increases to multiple benefit plans.
- The new maximum individual contribution for 401ks increased from $20,600 to $22,500. Catch up contributions for employees over 50 are now $7,500. Note the maximum contribution, does not include the employer match. The limit on total employer and employee contributions for 2023 is $66,000. With the $7,500 catch-up contribution, that limit becomes $73,500
- The new maximum contributions for Health Savings Accounts is $3850 up from $3650 in 2022. The maximum limit for Family coverage is now $7,750. The additional catch up contribution for employees 55 or older stayed the same at $1,000. The maximim contribution limit does include the employer contribution. So for example, if the employer contributes $1,000 to an individual HSA that employee can only contribute an additional $2850 of their own money to reach the maximum limit of $3850.
- The new cap for Health related Flexible Spending Accounts is now $3,050. If the employer’s plan permits the carryover of unused health FSA amounts, the maximum carryover amount rises to $610, up from $570.
Don’t forget to Order and Post Your New Federal and State Compliance Posters
Every company that has at least one employee is required to post federal and state labor posters. The EEOC has released a new mandatory poster for 2023. Posters must be placed in a conspicuous location where all employees can easily view them like a break room. If you have remote employees a version should also be available online. The easiest way to stay Compliance is to order posters from companies that specialize in labor law compliance. You can order all in one posters from https://www.laborlawcc.com/ or https://www.jjkeller.com/home.
Ohio Minimum Wage is now $10.10
As of January 1, all Ohio employees must be paid at least $10.10 per hour, considerably more than the Federal minimum wage.
Pregnant Worker’s Fairness Act (PWFA) and Providing Urgent Maternal Protections for Nursing Mothers Act (PUMP)
Included in the spending bill Congress passed at the end of the year, the PWFA will require employers with 15 or more employees to provide reasonable accommodations for job applicants and employees with known limitations related to pregnancy. The bill also included the Providing Urgent Maternal Protections for Nursing Mother’s Act (PUMP). This law ensures reasonable accommodations for pregnant and nursing mothers that could include allowing water bottles at work stations, a stool, extra bathroom breaks, and light duty work.
Workforce Trends – The War for Talent Continues
Agencies will need to continue to evaluate their compensation packages to attract and retain talent. While many forecasters continue to predict a recession, the most recent jobs report for December came in higher than expected. Employers added 223k jobs and unemployment dropped to 3.5% the lowest since the 1960s. Even with recent news of large layoffs, there are still over 10 million job openings or 1.7 available position for every unemployed person looking for work. According to the Society of Human Resource Management (SHRM) average salary increases in 2023 are predicted to average 4.6% (up from 4.2% in 2022) due to the continued competition for talent. 75% of respondents in the survey indicate finding and retaining workers is a challenge. Many speculate that even if the market slows, many employers will be hesitant to lay off workers in fear they will not be able to hire them back.