On Tuesday (10/18/16), the Social Security Administration announced an increase in the taxable wage base for the Social Security portion of FICA for 2017.
The FICA tax rate is the combined rate for social security and Medicare.
The Social Security portion is called OASDI or Old Age Survivors and Disability income, and it has a new taxable maximum earnings amount of $127,200 dollars. Both employees and employers will be responsible for paying 6.2% on wages earned up to this new allowable amount with a total maximum tax each of $7,886.40 (Business Management Daily, 2017).
The Medicare portion which provides healthcare for retirees, has not changed and remains 1.45% of all wages except for pretax medical and tax-free fringe benefits or for high earners 2.35% of FICA for married couples filing jointly earning $250k, married couples filing separately earning 125k or single employees earning more than $200k annually. Note that the portion employer’s pay on the Medicare tax does not change, it remains 1.45% (Miller, 2016).
In addition, Those who are self employed are stuck paying the entire portion themselves, they pay both the employee and employer portions of FICA which is 15.30% (United States, 2016).
Business Management Daily. (2016, October 19). 2017 FICA wage base increases to $127,200.Business Management Daily.Retrieved from https://www.businessmanagementdaily.com/47383/2017-fica-wage-base-increases-to-127200#_
Miller, S. (2016, October 19). Payroll taxes will hit higher incomes. Society for Human Resource Management. Retrieved from SHRM: https://www.shrm.org/resourcesandtools/hr-topics/compensation/pages/fica-social-security-tax-2017.aspx
United States. Social Security Administration. (2016). 2017 Social Security changes. Retrieved from ColaFacts2017: https://www.ssa.gov/news/press/factsheets/colafacts2017.pdf