You can expect to pay more Social Security tax in 2022. Same goes for employees on your payroll. That’s because the federal taxable wage base is going up.
The 2022 Social Security taxable wage base estimate is $146,700, an increase from the number in use this year: $142,800. That’s $3,900 more of each employee’s wages that’ll be subject to the tax, based on the projections.
Assuming there are no surprising rate changes for next year, the max you’ll pay in Social Security tax for each employee will be $9,095.40 (the $146,700 wage base multiplied by the 6.2% rate). Of course, that’s the cap on how much each employee will have to fork over in Social Security tax, too.
Increases are anticipated in the coming years, with estimates set at:
- $156,000 wage base in 2023
- $162,900 wage base in 2024
- $168,600 wage base in 2025, and
- $174,300 wage base in 2026.
All the details are contained in The 2021 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance. The report is due annually in April but was long overdue for 2021, finally released by the Social Security Administration (SSA) at the very end of August.
So you’re left with little time for planning now.
In fact, the final number should roll out from SSA in October, on the heels of the estimate. We’ll let you know when that happens.
Deferred Social Security tax due
In the meantime, some CFOs have another pressing issue to deal with regarding Social Security tax: paying any tax deferred in 2020. You may have opted to defer the tax under the Coronavirus, Aid, Relief and Economic Security (CARES) Act.
The first installment of the combined deferred employer and employee portions will be due at the end of 2021. Technically, the due date isn’t until Jan. 3, 2022. The second installment must be paid by the end of 2022. IRS warns that failure to pay the balance due will result in penalties and interest.