2024 Social Safety Wage Base

Paying Social Safety tax is a time-honored custom—since 1937, to be actual. Each employers and workers pay the tax. However when an worker hits the Social Safety wage base, it’s recreation over for withholding and contributing the tax.

Though the Social Safety tax charge usually doesn’t change from yr to yr, the Social Safety taxable wage base does. 

Learn on to study extra about Social Safety tax. Study what the withholding charge is, what the wages fund, and—after all—the wage base.   

Your 1-minute overview of Social Safety tax

Social Safety tax is an employment tax employers withhold from worker wages and contribute an identical portion. Each Social Safety and Medicare taxes make up the payroll tax often called FICA. 

Right here’s a fast recap of employment taxes and who pays what:

• Federal revenue tax: Worker 
• FICA tax: Worker and employer
• Federal unemployment tax: Employer
• State unemployment tax: Employer (plus worker in some states)
• State revenue tax (if relevant): Worker
• Different state taxes (if relevant): Worker
• Native revenue tax (if relevant): Worker 

The Social Safety Act, which is the regulation that began this system, was signed into regulation in 1935. Social Safety is a social insurance coverage program. The Social Safety Administration is the federal company that administers this system. 

Social Safety tax charge 

The Social Safety tax withholding charge is 6.2%. You have to withhold 6.2% from every worker’s wages. The Social Safety employer contribution can be 6.2%. 

Let’s say an worker receives $1,000 every paycheck. You have to withhold $62 ($1,000 X 0.062) from their wages and pay a further $62 for Social Safety tax.

Once more, each Social Safety and Medicare make up FICA tax. Medicare tax is 1.45%. So, FICA tax is 7.65% for the worker portion and seven.65% for the employer portion (6.2% + 1.45%). 

What do Social Safety wages fund?

Social Safety tax funds numerous issues, together with advantages for:

• Retired staff
• Retired staff’ dependents
• Disabled staff’ dependents
• Survivors 

Based on the Social Safety Administration, retired staff obtain a median month-to-month Social Safety good thing about $1,837. Disabled staff obtain a median month-to-month good thing about $1,486. 

Social Safety taxes additionally go towards paying for the administration of this system. After paying out advantages and administration prices, there’s a surplus. The federal authorities borrows the remaining cash from the Social Safety fund. The federal government is answerable for paying curiosity on the borrowed funds.

Social Safety wage base 2024

Now, onto the good things. The Social Safety withholding restrict. 

Solely withhold and contribute Social Safety taxes till an worker earns above the wage base. Keep up-to-date with the annual Social Safety wage base as a result of it usually modifications annually. 

The 2024 Social Safety wage base is $168,600, up from the 2023 restrict of $160,200.

After an worker earns above the annual wage base, don’t withhold cash for Social Safety taxes. And, don’t contribute the rest. 

Not all workers will earn above the withholding restrict. If an worker doesn’t meet this wage base, proceed withholding and contributing year-round.

The utmost Social Safety contribution in 2024 is $10,453.20 ($168,600 X 0.062).

If you happen to withhold greater than $10,453.20 in 2024, you surpassed the wage base and should reimburse your worker. 

Do not forget that the quantity you withhold for every worker relies on how a lot they earn.

Patriot’s payroll takes the stress out of payroll taxes

• Get rid of the necessity for guide calculations
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Do different taxes have a wage base?

Social Safety tax is the one federal tax workers pay with a wage base. Though Medicare additionally makes up FICA tax, it doesn’t have a wage base. As a substitute, it has a further tax as soon as an worker earns a specific amount. 

Remember the fact that some state taxes, like SUTA tax, and federal unemployment tax even have a wage base. 

Social Safety wage base historical past

Do you get pleasure from historical past? Check out this record of Social Safety wage bases since 2000: 

This text has been up to date from its unique publication date of Might 7, 2015.

This isn’t meant as authorized recommendation; for extra info, please click on right here.