PAYROLL TAX
01.Core Concepts
• Payroll taxes are due on deferred compensation amounts on the later of: • when the employee provides the related services, or • when the compensation is no longer subject to a substantial risk of forfeiture (e.g., when the amounts are vested) • Usually, only impact is 1.45% for Medicare portion of payroll taxes. Now with the Additional Medicare Tax, there is an additional 0.9% above thresholds. • Executives with salaries greater than $176,100 for 2025 are usually the only employees who defer compensation into these plans. • Ordinary income at the time deferred compensation is paid out to executive.