As you may be aware from following the news, leaders in Washington, D.C. are engaged in talks about the 2013 federal income tax rates as part of the "fiscal cliff" negotiations. As of this writing, no agreement has been reached. UC processes the December payroll prior to the holiday break for payment in early January. The existing 2012 federal tax rate schedule will continue to be used until Congress and President Obama reach an agreement and the IRS provides guidance for the federal tax withholding rates for 2013. As soon as the IRS publishes official guidance, the university will update our payroll system to begin withholding at the new tax rates. The payroll system will not make any retroactive tax adjustments once the new rates are implemented.

Your January 2, 2013 paycheck will reflect two tax changes:

• The temporary tax cut to the Social Security withholding rate ends on 12/31/12. As a result, the employee share of OASDI (Social Security) will revert back to 6.2 percent tax rate from 4.2 percent on payments made after 12/31/12.
• New 2013 California income tax rates will be implemented as a result from the passage of Proposition 30.

Additional news and updates are available on UC’s At Your Service website: http://atyourservice.ucop.edu/index.html