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Social Security Taxes For The New Year
There is good news for those earning north of $118,500 in 2016, at least where Social Security taxes are concerned.
Over the years while the general tax rate for Social Security for wage earners has remained at 6.2% (employers pay another 6.2%), there has always been a line beyond which earnings are not taxed. That is known as the contribution and benefit base.
Of course as costs rise and more people apply for benefits, the Social Security Administration makes adjustments to collect more taxes and in most cases that adjustment is made to the base by bumping up the maximum income limit for which the wages are taxed.
Thankfully after several years of upward adjustments, with a big jump in 2014, the base for 2016 remains at the same level of last year (2015) at $118,500. In other words the maximum amount one will pay towards Social Security taxes in 2016 is capped at $7,347.
That is good news for some, but for most people that is a non-issue. Average annual income in the United States is around $55,000.
More information and an interesting historical table of maximum taxed income on the Social Security Administration page.