The amount of an employee’s earnings that will be subject to Social Security tax during 2016 is now out from SSA.
The taxable wage base will remain unchanged at $118,500.
No change in the tax rate, either: 6.2% for employees and employers.
That means if an employee earns $118,500 or more next year, you’ll withhold $7,347 – and your company will pay that same amount.
Certain types of workers have to reach a threshold before their wages are taxable. The SSA announced these earning thresholds for 2016:
- domestic employees, $2,000, and
- election workers, $1,700.
Although the following amounts don’t affect what’s taxable, here’s how much employees can earn before their retirement benefits are reduced:
- $15,720 for employees reaching the normal retirement age after 2016, and
- $41,880 for those reaching the normal retirement age in 2016, up until their birthday month.