The maximum amount of earnings on which you pay Social Security taxes is rising to $127,200, up from $118,500 in 2016.
Q. What is the maximum amount of earnings that will be subject to Social Security taxes in 2017? How does that limit and the tax rate compare with 2016?
A. The maximum amount of earnings on which you pay Social Security taxes is rising from $118,500 in 2016 to $127,200 in 2017. This is the largest increase in recent years. The limit was also $118,500 in 2015, and it was $117,000 in 2014. For historical context, the Social Security tax applied to the first $76,200 of earnings in 2000, $51,300 in 1990 and $25,900 in 1980.
The tax applied to the first $3,000 of earnings in 1937, when Social Security started, and the limit remained there through 1950. See the table showing the limit for every year.
The tax rate for Social Security and Medicare remains the same: 7.65% for employees and 15.30% for the self-employed. That amount is collected on wages and self-employment income covered by Social Security, up to the income limit. Earnings above that level are subject only to the 1.45% Medicare portion of the tax, or 2.90% for the self-employed. (There is no limit on the amount to which Medicare taxes apply.)
An additional 0.9% Medicare tax applies to earnings over $200,000 for individuals and over $250,000 for married couples. See the IRS's fact sheet about Questions and Answers for the Additional Medicare Tax for more information about this tax.
For more information about the 2017 Social Security changes, see this Fact Sheet from the Social Security Administration.
This article was provided by the Ronald J. Fichera Law Firm, where our mission is to provide trusted, professional legal services and strategic advice to assist our clients in their personal and business matters. Our firm is committed to delivering efficient and cost-effective legal services focusing on communication, responsiveness, and attention to detail. For more information about our services, contact us today!
Click on the Contact Us Link or go to the Virtual Estate Planning (VEPS) Page of our Web site.
As a reminder, this Blog Post is for informational purposes only and is not intended as legal or tax advice.
There are no comments for this post. Be the first and Add your Comment below.
Leave a Comment