Human Resources News & Insights

Taxable wage base shoots up next year

Some of your company’s highest earners won’t be happy when they hear they’ll be paying more taxes next year.

SSA’s Office of the Chief Actuary just announced its annual, mid-year estimate of the following year’s taxable wage base.

In 2012, SSA estimates employees will have to pay Social Security taxes on wages up to $110,700 (plus the unlimited ceiling on Medicare taxes). That’s up from this year’s wage base of $106,800.

SSA won’t announce the official wage base until October, and only then by following formulas set by law. That said, though, the agency’s early predictions have been on the mark the past several years.

Here’s what SSA estimates in future years:

Year/Wage Base

2013: $114,900

2014: $120,000

2015: $125,400

2016: $130,800

2017: $135,900

2018: $141,300

2019: $146,700

2020: $153,300

You can get SSA’s full report here.

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Comments

  1. PO'd HR Guy says:

    So, someone making up to $110,700 in 2012 will have 100% of their income taxable. But someone making $221,400 will have only 50% of his income taxed. And some fat cat pulling in $1,107,000 will only 10% of his income subject to tax. All income should be taxable.

  2. Joanna G. says:

    I fully agree, all income should be taxable. The truth, and common knowledge is that the wealthier you are the better accountant you have who most certainly will make sure you don’t pay what you should. Sad, how quickly people learn to do what is dishonest, but the truth of the matter is that it is our fiscal system that creates loopholes allwing disproportionte taxation and hand-outs to those who should not be entitled.

  3. Eric Bowen says:

    So, someone earning $110,700 or more will have to pay an extra $241.80 (=(110,700 – 106,800) * 6.2%) per year, and will be unhappy. Meanwhile, the rest of us are probably thinking how happy we would be to be earning $110,700.

  4. Whattayamean says:

    What I want to know is this: on what income figure is the social security benefit based? You know those benefit statements the Social Security Admin used to send every year and it listed all the years you worked and your income for those years? What income would be listed for the fat cat in PO’ds example? $221400 or $110700? If their benefit base is capped ($110700), then shouldn’t their tax be capped, too? Conversely, if they pay taxes on $221400, then shouldn’t their benefit base be $221400? Now that would bankrupt the fund overnight – all these rich people paying a bunch in tax but getting a whole bunch more back in benefits. I say let’s compromise. Tax them on the full amount but base their benefits on the cap figure. They don’t need it anyway.

  5. Common Sense says:

    This is only one of many reasons why the system should be privatized or slowly scrapped. Social Security and Medicare are not failing because rich people don’t pay enough nor because they receive more benefits than everybody else. It is failing because it is an unsustainable Ponzi scheme dreamed up by socialist utopians with total disregard for changing demographics, inflation, accountability… It reeks of class warfare to suggest otherwise.

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