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January 08, 2024 at 02:22 PM
The Internal Revenue Service has announced an increase in the Social Security wage base to $168,600, up from $160,000.
The Social Security wage base — the amount of worker pay that is subject to a Social Security payroll tax — is adjusted each year based the national average wage index. The tax rate is 12.4%, split evenly between employer and employee.
As the IRS explains in Publication 15, only the Social Security tax has a wage base limit. All covered earnings are subject to a Medicare payroll tax at a rate of 2.9%, split evenly between employer and employee.
Both payroll tax rates are unchanged from 2022. Self-employed individuals pay both shares of the taxes.
“Considering the wage base had a big increase in 2022 and, now again in 2023, we are paying Social Security taxes on a larger amount of our earnings,” Jeff Bush of The Washington Update told ThinkAdvisor on Monday. “Effectively, a tax increase.”
