HR Compliance

The 2018 Social Security Wage Base increases to $128,400

By

Ali Nowrouzi

| Dec 4, 2017

Each October, the Social Security Administration (SSA) announces cost-of-living adjustments based on changes in national average wages. These adjustments take effect the following January.

Based on available data, on Oct. 13, the SSA communicated the maximum amount of wages subject to Social Security tax for 2018 to be $128,700, an increase from $127,200 in 2017.

However, due to additional information received later that month, the SSA announced a revised amount of $128,400 – or less than $300 originally reported – on Nov. 27.

In addition, the SSA’s revision impacts the “bend points” – that is, figures used in the computation of Social Security benefits – for primary insurance and the family maximum.

Employer responsibility

For 2018, an employer must withhold the following from employee wages:

  • 6.2% Social Security tax on the first $128,400 of employee wages (maximum tax is $7,960.80; i.e., 6.20% × $128,400), plus
  • 1.45% Medicare tax on the first $200,000 of employee wages, plus
  • 2.35% Medicare tax (regular 1.45% Medicare tax + 0.9% additional Medicare tax) on all employee wages in excess of $200,000.

These rates and wage limits will be updated in the Paycom system effective Jan. 1, 2018. For more information, visit the Social Security website.

Disclaimer: This blog includes general information about legal issues and developments in the law. Such materials are for informational purposes only and may not reflect the most current legal developments. These informational materials are not intended, and must not be taken, as legal advice on any particular set of facts or circumstances. You need to contact a lawyer licensed in your jurisdiction for advice on specific legal problems.

About the Author

Ali Nowrouzi

As a tax research analyst for Paycom, Ali Nowrouzi monitors payroll news and information released by federal and state agencies. He previously worked in the oil and gas industry as a document and data specialist. Nowrouzi holds an associate’s degree in accounting from Rose State College and studied accounting at the University of Central Oklahoma.

See more posts by Ali Nowrouzi