October 14, 2022 Social Security wage base to increase in 2023
The Social Security wage base will increase from $147,000 to $160,200 in 2023, higher than the $155,100 high-cost and low-cost estimate published in the June 2022 Annual Report of the Board of Trustees. (See EY Tax Alert 2022-0873, 6-6-2022; Social Security Administration Press Release.) The Medicare tax rate for 2022 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 for single filers (additional thresholds apply to other filing status types)While employers are required to withhold the additional 0.9% on covered wages over $200,000, there is no corresponding employer tax. The annual adjustment to the Social Security wage base is based on the increase in average wages. Some states and localities index the annual adjustments to their minimum wage to increases to the Consumer Price Index (CPI). Because of current inflation, some jurisdictions have announced significant increases for 2023; for instance, SeaTac, Washington's minimum wage will increase from $17.54 to $19.06 effective January 2023. These higher minimum wage rates could contribute to a substantial increase to the Social Security wage base in 2024. For a quick reference chart see the chart below. For the complete Social Security Administration fact sheet go here. Social Security, Medicare and disability insurance contributions 2022 compared to 2023
* 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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