Circular E

What Is Circular E?

Circular E is the Employer's Tax Guide published by the Internal Revenue Service (IRS). The publication provides guidance and instructions to employers about their federal tax responsibilities. It includes the basic IRS rules for withholding, reporting, and depositing taxes, correcting employment taxes, and other insights.

Additionally, Circular E includes links to other helpful IRS publications employers may need.

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When Does the IRS Publish New Circular E Guidelines?

Generally, the IRS releases an updated Circular E each year in December. Employers are expected to check the IRS website for updates in publications for compliance purposes. However, employers can also subscribe to IRS Newswire for weekly email alerts about a variety of topics, such as tax law changes.

Examples of Circular E Guidance

Overall, Circular E includes updates and reminders about:

Work classification guidelines to determine whether workers are employees or independent contractors
Withholding tables to help employers calculate how much federal income tax to withhold from an employee’s regular wages and supplemental wages
Employment tax rates for Social Security and Medicare, Federal Unemployment Tax Act (FUTA) tax, and more
Special rules for taxing tips, fringe benefits, etc.
Tax return filing guidelines to help employers determine which forms they need to submit, such as Form 940 and Form 941

For example, the IRS released these new guidelines around Social Security and Medicare tax for 2023:

"The rate of Social Security tax on taxable wages, including qualified sick leave wages and qualified family leave wages paid in 2023 for leave taken after March 31, 2021, and before October 1, 2021, is 6.2% each for the employer and employee or 12.4% for both.

Qualified sick leave wages and qualified family leave wages paid in 2023 for leave taken after March 31, 2020, and before April 1, 2021, aren't subject to the employer share of Social Security tax; therefore, the tax rate on these wages is 6.2%. The Social Security wage base limit is $160,200.

The Medicare tax rate is 1.45% each for the employee and employer, unchanged from 2022. There is no wage base limit for Medicare tax. Social Security and Medicare taxes apply to the wages of household workers you pay $2,600 or more in cash wages in 2023. Social Security and Medicare taxes apply to election workers who are paid $2,200 or more in cash or an equivalent form of compensation in 2023."

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