The Social Security wage base will increase from $118,500 to $127,200, higher than the $126,000 projected in the June 2016 Annual Report of The Board of Trustees. (See EY Payroll NewsFlash, Vol.17, #093, 6-27-2016)

The increase in the wage base of $8,700 for 2017 is significant considering there was no cost of living adjustment to Social Security taxes last year.

The Medicare tax rate for 2017 remains at 1.45% of all covered earnings for employers and employees; however for wages in excess of $200,000, the Additional Medicare Tax of 0.9% applies to earned income of more than $200,000 ($250,000 for married couples filing joint). While employers are required to withhold the additional 0.9% on covered wages in excess of $200,000, there is no employer matching contribution.

For a quick reference chart see the following page.

For the federal and state rates and limits for 2016 see our special report.

For the complete Social Security Administration fact sheet go here.

Social Security, Medicare and Disability insurance contributions

2016 compared to 2017

* Employers must withhold an additional Medicare tax of .9% of wages in excess of $200,000. There is no employer matching contribution.

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