Social Security Wage Base, FICA Tax Rates Unchanged For 2016
Author: Rena Pirsos, XpertHR Legal Editor
October 19, 2015
The Social Security Administration (SSA) has announced that the Social Security taxable wage base will not be adjusted for inflation and will remain $118,500 for 2016. Because the national Consumer Price Index (CPI), on which the annual cost-of-living adjustment (COLA) is based, has not risen since the last COLA adjustment in 2015, other changes that usually occur based on changes in the CPI will also not take effect on January 1, 2016.
Specifically, the Social Security and Medicare (FICA) tax rates will not change for 2016. 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. The maximum Social Security tax employees and employers will each pay in 2016 will remain $7,347.
Employees will continue to pay Medicare tax on all covered wages at the rate of 1.45%. The total FICA tax rate for 2016, which is the 6.2% Social Security tax rate plus the 1.45% Medicare tax rate, will remain 7.65% up to the $118,500 Social Security wage base.
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 2016. The total 2016 Medicare tax rate will, therefore, remain 2.35%. Employers do not pay the AMT.