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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. [ 1 ] [ 2 ] A person with $10,000 of gross income had $620.00 withheld as Social Security tax from his check and the employer sent an additional $620.00.
Earning anything below the wage base limit in any of those 35 years would automatically disqualify you from earning the maximum amount. Here are the past 10 wage base limits, including the newly ...
The new wage base limit, which will be in effect in 2025, is $176,100, up from the $168,600 limit in 2024. This means more income of some workers will be subject to Social Security payroll taxes.
There could be a situation in which you earn above the wage base limit in one year but not the next because it increased. For example, consider someone who earns $175,000 in 2024.
The Federal Insurance Contributions Act (FICA) (codified in the Internal Revenue Code) imposes a Social Security withholding tax equal to 6.20% of the gross wage amount, up to but not exceeding the Social Security Wage Base ($97,500 for 2007; $102,000 for 2008; and $106,800 for 2009, 2010, and 2011). The same 6.20% tax is imposed on employers.
Each calendar year, the wages of each covered worker [a] up to the Social Security Wage Base (SSWB) are recorded along with the calendar by the Social Security Administration. If a worker has 35 or fewer years of earnings, then the Average Indexed Monthly Earnings is the numerical average of those 35 years of covered wages; with zeros used to ...
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.
That is, the effective tax rate regresses, or decreases, as income increases beyond the compensation limit or wage base limit amount. [77] The Social Security component is a flat tax for wage levels under the Social Security Wage Base (see "Regular" employees above). Because no tax is owed on wages above the wage base limit amount, the total ...