Estimated Social Security Wage Base for 2014

Earnings from a job or self-employment are taken into account for Social Security tax purposes only up to a “wage base” amount. For 2013, that amount is $113,700. The Social Security Administration is projecting the wage base for 2014 to be $115,500. The actual wage base amount will be announced in mid-October.

While some things change, others remain the same. There is no wage base for the Medicare portion of FICA and self-employment tax; all earnings are subject to the tax. The tax rates for the Social Security and Medicare portions of FICA are also unchanged. The rate for the Social Security portion is 6.2% on earnings up to the wage base, and the rate for the Medicare portion is 1.45% on all earnings. These rates are paid by the employee and the employer. Self-employed people pay both portions but deduct one half, which is the employer portion.

The Social Security wage base has no impact on the new additional Medicare tax on earnings of high-income individuals. This 0.9% tax applies to earnings above a threshold amount that depends on filing status:

• $200,000 for singles and heads of households
• $250,000 for joint filers
• $125,000 for married persons filing separately

Thus, an employee who is single and earns $225,000 in 2013 will pay the following for Social Security and Medicare taxes of $10,537 ($8,698 + $1,614 + $225):

• 7.65% on $113,700
• 1.45% on $111,300 ($225,000 – $113,700)
• 0.9% on $25,000 ($225,000 – $200,000)

Source: SSA Board of Trustees Report at http://www.socialsecurity.gov/oact/TR/2013/tr2013.pdf