The Social Security Administration (SSA) has announced that the 2015 Social Security taxable wage base is increasing to $118,500, up $1,500 from the 2014 taxable wage base of $117,000. Once an employee reaches this taxable wage threshold no further Social Security tax will be withheld.
FICA Tax Rates
The 2015 FICA tax rate for employees will remain at 7.65%. This is the combined rate for Social Security and Medicare. The Social Security portion is 6.2% on earnings up to the taxable wage base of $118,500, and the Medicare portion is 1.45% on all earnings. Employers continue to pay a matching portion of 6.2% for Social Security and 1.45% for Medicare respectively.
Employees that have earned income over $200,000 will also be required to pay an additional 0.9% Medicare surtax, increasing their total FICA amount to 8.55%. The Medicare surtax is only imposed on employees and no employer portion.
If you’re a client AdvaPay’s web-based payroll system will automatically adjust to account for the higher tax limit for the Social Security portion of FICA. If you use another payroll provider confirm your payroll system will be updated. In addition, employers should notify their employees about the increase in FICA tax ahead of time in an effort to reduce any confusion.
Get More Information
For more information from the Social Security Administration regarding these changes, click the following link: 2015 Social Security Changes
Have questions about a FICA tax calculation? We’d love to help just leave your question below!
From federal to state and local tax filing, AdvaPay Systems offers guaranteed filing and deposit of payroll taxes that not only protects our clients from liability but also provides peace of mind.