Social Security Wage Base Increases to $110,100 in 2012

 

Social Security Wage Base Increases to $110,100 in 2012

The Social Security Administration (SSA) announced on Wednesday, October 19, 2011, that the 2012 social security wage base will be $110,100, up from $106,800 where it had been set for the past three years (the SSA Fact Sheet is available at www.americanpayroll.org/members/Forms-Pubs/#guide). As in prior years, there is no limit to the wages subject to the Medicare tax; therefore all covered wages are still subject to the 1.45% tax.

The FICA tax rate, which is the combined social security tax rate of 6.2% and the Medicare tax rate of 1.45%, will be 7.65% for 2012. The maximum social security tax employees and employers will each pay in 2012 is $6,826.20. Note that the 2011 FICA tax rate was 4.2% for employees and 6.2% for employers under the Tax Relief Act of 2010, and that the rate is scheduled to be 6.2% for both employees and employers in 2012. However, bills currently being considered in Congress may change this.

The social security wage base for self-employed individuals in 2012 will also be $110,100. There is no limit on covered self-employment income that will be subject to the Medicare tax. The self-employment tax rate will be 15.3% (combined social security tax rate of 12.4% and Medicare tax rate of 2.9%). In 2012, the maximum social security tax for a self-employed individual will be $13,652.40. Again, note that the 2012 FICA tax rate for both employees and employers is scheduled to be 6.2%, but that Congress is considering proposals that would change this.

FICA coverage threshold for domestic, election workers
The threshold for coverage under social security and Medicare for domestic employees will be $1,800 in 2012, up from $1,700 in 2011; the coverage threshold for election workers will be $1,500 in 2012, unchanged from 2011.

(Source: American Payroll Association)