Social Security Wage Base Increasing to $118,500 for 2015

Author: Rena Pirsos, XpertHR Legal Editor

October 23, 2014

The Social Security Administration (SSA) has announced that the Social Security taxable wage base will be $118,500 for 2015, as adjusted for inflation. That is an increase of $1,500 from the 2014 wage base of $117,000. As a result, millions of workers will have a greater amount of Social Security tax withheld from their pay by their employers in 2015. The maximum Social Security tax employees and employers will each pay in 2015 is $7,347, which amounts to an increase of $93 each.

As in prior years, there is no limit on the amount of wages subject to Medicare tax withholding. All covered wages of employees will still be subject to the 1.45% tax. The additional 0.9% Medicare tax (AMT) that applies to employee wages in excess of $200,000, and to married couples who file joint tax returns and earn more than $250,000, will continue to apply in 2015. The total 2015 Medicare tax rate will, therefore, remain 2.35%. Employers do not pay the AMT.

The Social Security and Medicare (FICA) tax rates will not change for 2015. Employers and employees will each continue to pay the Social Security tax rate of 6.2% on all wages up to the $118,500 wage base. Employees will continue to pay Medicare tax on all covered wages at the rate of 1.45%. Thus, the total FICA tax rate for 2015, which is the 6.2% Social Security tax rate plus the 1.45% Medicare tax rate, will remain 7.65% up to the new $118,500 Social Security wage base.

Election and Domestic Workers

For 2015, the FICA coverage threshold for election workers (generally those who work a few days a year for state or local governments or school or local fire districts) will remain $1,600. The coverage threshold for domestic workers (e.g., cooks, butlers, maids, housekeepers, gardeners) will remain $1,900.