Social Security Wage Base Increases to $118,500 in 2015

The Social Security Administration (SSA) announced on Wednesday, October 22, 2014, that the 2015 social security wage base will be $118,500, an increase of $1,500 from the 2014 wage base of $117,000 (the SSA Fact Sheet is available at www.americanpayroll.org/members/Forms-Pubs/#annual). As in prior years, there is no limit to the wages subject to the Medicare tax; therefore all covered wages are still subject to the 1.45% tax. As in 2014, wages paid in excess of $200,000 in 2015 will be subject to an extra 0.9% Medicare tax that will only be withheld from employees’ wages. Employers will not pay the extra tax.

The FICA tax rate, which is the combined social security tax rate of 6.2% and the Medicare tax rate of 1.45%, will be 7.65% for 2015 up to the social security wage base. The maximum social security tax employees and employers will each pay in 2015 is $7,347. This will be an increase of $93 for employees and employers.

The social security wage base for self-employed individuals in 2015 will also be $118,500. There is no limit on covered self-employment income that will be subject to the Medicare tax. The self-employment tax rate will be 15.3% (combined social security tax rate of 12.4% and Medicare tax rate of 2.9%) up to the social security wage base. In 2015, the maximum social security tax for a self-employed individual will be $14,694.

FICA coverage threshold for domestic, election workers
The threshold for coverage under social security and Medicare for domestic employees will be $1,900 in 2015, unchanged from 2014; the coverage threshold for election workers will be $1,600 in 2015, also unchanged from 2014.

*This post is a Compliance Update taken from the American Payroll Association.

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