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Each year, workers pay taxes on income up to a specific amount, called the wage base limit. In 2024, the limit is $168,600 annually, however, limits increase over time based on wage growth.
Wage and salary earnings from covered employment, up to an amount determined by law (see tax rate table), are subject to the Social Security payroll tax. Wage and salary earnings above this amount are not taxed. In 2024, the maximum amount of taxable earnings is $168,600. [6]
It is also the maximum amount of covered wages that are taken into account when average earnings are calculated in order to determine a worker's Social Security benefit. In 2020, the Social Security Wage Base was $137,700 and in 2021 was $142,800; the Social Security tax rate was 6.20% paid by the employee and 6.20% paid by the employer.
The Social Security tax rate is 12.4% of your paycheck, and another 2.9% goes to Medicare, for a total FICA tax rate of 15.3%. ... those with over $200,000 in income -- pay an additional 0.90% ...
For the 2024 tax year, your annual earnings limit is $22,230. If you reach full retirement age in 2024, the most you can earn in the months before retirement is $59,520.
The increase in 2025 will perhaps have the biggest impact on those earning between $168,600 and $176,100 per year, as you'll face Social Security tax on income that wasn't previously taxed in 2024.
[a] [9] The taxation limit in 2020 was $137,700 of gross compensation, resulting in a maximum Social Security tax for 2020 of $8,537.40. [7] This limit, known as the Social Security Wage Base , goes up each year based on average national wages and, in general, at a faster rate than the Consumer Price Index (CPI-U).
The good news is that not all income is subject to Social Security payroll taxes -- it's only up to a certain amount, called the "wage base limit." The wage base limit in 2024 is $168,600, so any ...