The Social Security Administration (SSA) has announced that the 2017 Social Security taxable wage base will be increased to $127,200, up $8,700 from the 2016 taxable wage base of $118,500. When an employee reaches this taxable wage threshold no more Social Security tax will be withheld.
FICA Tax Rates
The 2017 FICA tax rate for employees still remains at 7.65%. This is the combined rate for Medicare and Social Security. The Social Security portion is 6.2% on earnings and it is up to the taxable wage base of $127,200, and the Medicare portion is 1.45% for all earnings. Employers will continue to pay a matching amount of 1.45% for Medicare and 6.2% for Social Security.
Employees who have earned income over $200,000 will be required to pay an additional 0.9% Medicare surtax, which increases their total FICA amount to 8.55%. The Medicare surtax is imposed only on employees and not the employer’s portion.
If you are a client, AdvaPay’s web-based payroll system will adjust automatically to account for the higher tax limit for the Social Security portion of FICA. If you are currently using another payroll provider, you have to confirm that your payroll system will be updated. Additionally, employers have to notify their employees about the increase in FICA tax early on so as to reduce any confusion.
Get More Information
To get more information from the Social Security Administration regarding the changes, access the following link: 2017 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.