2019 Social Security Taxable Wage Base Marks Notable 3.5% Increase

Author: Rena Pirsos, XpertHR Legal Editor

October 16, 2018

The Social Security taxable wage base - the ceiling on the 6.2% Social Security portion of FICA taxes - will be $132,900 in 2019. This represents a 3.5% increase over the 2018 taxable wage base of $128,400, and is one of the larger percentage increases in several years.

That means in 2019, wages earned above $132,900 are not subject to Social Security tax withholding. The maximum Social Security tax that employers and employees will each pay in 2019 will be $8,239.80 ($132,900 × .062%), which is $279 more than they paid in 2018, according to the Social Security Administration (SSA).

Employers must update their payroll systems to reflect these new amounts, beginning with the first payroll of 2019.

Rates for Medicare tax (the other portion of FICA) are unchanged for 2019. There is no maximum Medicare tax. Employers and employees will each continue to pay 1.45% on wages up to $200,000. On wages exceeding $200,000, employers will continue to pay 1.45%, while employees will continue to pay 2.35%.

Domestic and Election Workers

Different wage bases apply to domestic and election workers. Taxable wage bases for these workers in 2019 will remain unchanged at $2,100 for domestic workers and $1,800 for election workers.

Quarters of Coverage

In order to qualify for Social Security benefits, employees must earn at least a base amount each calendar quarter. For 2019, the base amount is $1,360 (up $40 from 2018).

Retiree Earnings Tests

Retirees who begin receiving Social Security benefits, but then decide to return to work, may forfeit some benefits depending on the age at which they retire. In 2019, these benefit reductions are as follows:

  • Employees who retire at full retirement age can earn up to $46,920, or $3,910 a month, without losing benefits (up from $45,360 and $3,780, respectively, in 2018). The earnings test applies to earnings employees receive in months before they attain full retirement age. The SSA withholds $1 in benefits for every $3 in earnings above this limit.
  • Employees who retire before attaining full retirement age can earn up to $17,640, or $1,470 a month, without losing benefits (up from $17,040 and $1,420, respectively, for 2018). The SSA withholds $1 in benefits for every $2 in earnings above this limit.

Retirees who return to work before attaining full retirement age do not lose withheld benefits entirely. Their monthly benefits increase when they reach full retirement age to account for benefits that the SSA withheld.

Benefit COLAs

Social Security beneficiaries will see a 2.8% cost-of-living adjustment (COLA) increase in their Social Security benefits in 2019 (up from a 2% COLA increase in 2018). The maximum monthly Social Security benefit for an employee who retires in 2019 at full retirement age is $2,861 (up from $2,788 in 2018). The estimated average monthly benefit for all retired workers in 2019 is $1,461 (up from 1,422 in 2018).