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October 14, 2021
2021-1865

Social Security wage base to increase in 2022

The Social Security wage base will increase from $142,800 to $147,000 in 2022, higher than the $146,700 high-cost estimate and lower than the $147,300 low-cost estimate published in the August 2021 Annual Report of the Board of Trustees. (See EY Tax Alert 2021-1601, 9-7-2021; Social Security Administration Press Release.)

The Medicare tax rate for 2021 remains at 1.45% of all covered earnings for employers and employees. The Additional Medicare Tax of 0.9% applies to earned income of more than $200,000 ($250,000 for married couples filing jointly). While employers are required to withhold the additional 0.9% on covered wages over $200,000, there is no corresponding employer tax.

For a quick reference chart see the below.

For the complete Social Security Administration fact sheet go here.

Social Security, Medicare and disability insurance contributions

2021 compared to 2022

Description

2021

2022

Increase

Social Security tax rate for employees

6.20%

6.20%

-0-

Social Security tax rate for employers

6.20%

6.20%

-0-

Social Security wage base

$142,800.00

$147,000.00

$ 4,200.00

Maximum Social Security tax for employees

$ 8,853.60

$ 9,114.00

$ 260.40

Medicare tax rate for employers

1.45%

1.45%

-0-

Medicare tax rate for employees

1.45%*

1.45%

-0-

Medicare tax rate for employees on wages above

$200,000*

2.35%

(1.45% Medicare

+ 0.9% Additional Medicare)

2.35%

(1.45% Medicare

+ 0.9% Additional Medicare)

-0-

Medicare wage base

No limit

No limit

N/A

* Employers must withhold the Additional Medicare Tax of 0.9% of wages over $200,000. There is no corresponding employer tax.

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Contact Information
For additional information concerning this Alert, please contact:
 
Workforce Tax Services - Employment Tax Advisory Services
   • Kristie Lowery (kristie.lowery@ey.com)
   • Kenneth Hausser (kenneth.hausser@ey.com)
   • Debera Salam (debera.salam@ey.com)

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