2017 Social Security Taxable Wage Base Announced
The Social Security Administration (SSA) announced on October 15, 2016, that the 2017 Social Security taxable wage base will be $127,200, a significant increase from 2016. (See the evolution of the SSA wage base here.)
There is still no limit to the wages that can be subject to the Medicare tax, which equals 1.45% of all covered wages. Just like we saw in 2016, wages over $200,000 earned in 2017 will face an extra 0.9% Medicare tax, which will be withheld from employees' wages only (employers are not responsible for this additional tax).
The FICA tax rate is a combination of the social security tax rate (6.2) and the aforementioned Medicare tax rate (1.45). Therefore, for 2017, the FICA tax rate will be 7.65%, to the height of the social security wage base. This means the maximum social security tax for employees and employers in 2017 is $7,886.40. This is an increase from what we saw in 2016.
Self-employed individuals will also see a rise for the social security wage base in 2017: $127,200. There is no limit for these individuals on the covered income that is subject to the Medicare tax. The tax rate for self-employed individuals is a combination of the social security tax rate (12.4) and the Medicare tax rate (2.9), which equals 15.3%. Therefore, the maximum social security tax for a self-employed individual will be $15,772.80 in 2017.
The FICA threshold for social security and Medicare coverage for domestic employees (better known as the "Nanny tax") will stay the same in 2017 at $2,000. The threshold for election workers will raise to $18,000. For more information, visit the Social Security Administration website.
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Source: American Payroll Association