INCOME TAX WITHHOLDING
There are five basic tax brackets of 15%, 28%, 31%, 36% and 39.6%. The 2001 Withholding Table (Circular E) issued by the Internal Revenue Service reflects these rates.

SOCIAL SECURITY EMPLOYEE TAX TABLE
There are two separate withholding tables and wage bases for OASDI and Medicare (HI) portions of FICA. Employers are required to separately report the withholding for each tax. Social Security requires a withholding of 6.2% OASDI tax. The related wage base is $80,400. Medicare requires a withholding of 1.45% which must be withheld from all wages paid. Employers also must pay Social Security and Medicare taxes on covered employees in the same amount as that withheld.

FEDERAL UNEMPLOYMENT TAX
The wage base remains at $7,000. Effective tax rate for 2001 will be .8% and deposits should be made at that rate.

PENNSYLVANIA INCOME TAX
The Pennsylvania state withholding rate will be 2.8% for 2001.

PENNSYLVANIA UNEMPLOYMENT TAX
Wages subject to unemployment contributions remain at $8,000.

NEW JERSEY INCOME TAX
Rates have remained unchanged for 2001 and range from 1.4% to 6.37% on graduated levels of income.

NEW JERSEY UNEMPLOYMENT TAX
Wages subject to unemployment contributions will increase from $21,200 to $22,100. The withholding rate will be .925% for a maximum withheld amount of $204.43.

CITY OF PHILADELPHIA WAGE TAX
4.5635% for Philadelphia residents and 3.9672% for non-residents.

OTHER MATTERS:

RETIREMENT EARNINGS TEST FOR SOCIAL SECURITY RECIPIENTS
Employees age 62 through 64 can earn a maximum of $10,680 per year with no reduction in benefits. The maximum earnings increases to $25,000 in the year an employee turns 65. However, there is no limit on earnings beginning in the month an employee attains age 65.

401(k) PLAN LIMITATION
The annual employee elective deferral limit will remain at $10,500 for 2001.

FORMS W-4, W-9, AND I-9
Remind all employees to complete Form W-4 and claim all the allowances to which they are entitled. Be sure to receive Form W-9 for all commissions, interest, rents, etc. paid to individuals. Form I-9 (Employment Eligibility Verification) and the New Hire form are mandatory for all employees and should be completed on the first day of employment.