Big news from the Social Security Administration: Starting next year the maximum amount of earnings subject to the Social Security tax will increase to $113,700.
This is an increase from $110,100, a 3.2% hike. Of the estimated 163 million workers who will pay Social Security taxes in 2013, nearly 10 million will pay higher taxes as a result of the increase in the taxable maximum.
As for Medicare, all wages are subject to the 1.45% Medicare portion of FICA, since there is no wage base. And, as a reminder, the Medicare tax rate is scheduled to increase 0.9% to a maximum of 2.35% when employees earn more than $200,000.
For a complete breakdown on the upcoming Social Security changes, check out the SSA’s fact sheet.
That wasn’t the only increase. Social Security Income benefits will also be increasing 1.7% for the 60+ million Americans that receive them. The 1.7 percent cost-of-living adjustment will begin with benefits that more than 56 million Social Security beneficiaries receive in January 2013. Increased payments to more than 8 million SSI beneficiaries will begin on December 31, 2012.
However, this increase may see little change for seniors as they’ll face increases in their Medicare premiums, the Social Security Administration warned.