The Social Security Administration (SSA) has announced that the 2016 Social Security taxable wage base is going to be $118,500 which is the same as 2015 and it will see no increase this year. Once an employee reaches this taxable wage threshold no further Social Security tax will be withheld.
FICA Tax Rates:
The 2016 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. This means that the max Social Security tax for employees is going to be $7,347. Employers continue to pay a matching portion of 6.2% for Social Security and 1.45% on Medicare respectively.
Employees that have earned over $200,000 will also be required to pay an additional 0.9% Medicare surtax, increasing their FICA amount to 8.55%. The Medicare surtax is only imposed on employees not employers.