Ringing in 2025: Four Payroll limits to watch this new year

The holidays are upon us! Amidst the tinsel, mistletoe and shopping, there are also payroll and benefit topics to put on your task list. As we ring in the New Year, we made you a list to check twice, ensuring you and your organization start 2025 with a smooth and joyful transition.

Each year, contribution and tax limits change. As a best practice, the payroll and benefit departments in every organization should review and assess the impact on their individual processes and configurations.

Pension contribution limits

• 401k, 403b and 457 contributions will increase $500 for a maximum of $23,500.
• The over 50 catchups for these plans will remain the same as 2024 limits of $7,500.
• New for 1/1/25 Secure 2. has added an additional “Super” catch-up provision of $11,250 for those age 60-63.
• Verify these limits in Oracle by navigating to the calculation value definitions under the quick actions.

Social Security wage limit

• While the social security rate of 6.2% will not change, the covered compensation will change to $176,100 in 2025. This is an annual increase of $6,300.
• Medicare rate remains the same at 1.45% with no limit on covered compensation.
• Additional Medicare Tax rate remains at 0.9% for wages over $200,000 if filing single and $250,000 for joint filers.
• Oracle’s best practice is to test the new limits in a non-production environment in January.

Health Savings Account (HSA limits)

• Self-only election limit has increased to $4,300.
• The family election limit has increased to $8,550.
• Catch-up contributions for those employees who are 55 and older remain at $1,000 beyond the set limits for 2025.
• Oracle Cloud allows you to effectively track contributions to ensure alignment with requirements. When configuring these limit increases in Oracle benefits, this should be done in the HSA calculator common lookups, as well as in the HSA enrollment rate configuration to ensure contributions will track against maximums.