The Social Security Administration (SSA) has announced that the maximum amount of wages subject to the 6.2 percent Social Security tax (old age, survivor and disability insurance) for 2018 will rise from $127,200 to $128,700. The increase of just over one percent is a lot less than the seven percent jump from 2016 to 2017.
The maximum amount of Social Security a taxpayer could pay goes from $7,886.40 in 2017 to $7,979.40 in 2018, an increase of $93. The SSA also announced that beneficiaries will receive a two percent increase in benefits in 2018 after receiving a .3 percent increase in 2017 and none in 2016; resulting in a $27/month increase per retiree.
The amount a worker under full retirement age can earn before Social Security benefits are reduced has also been increased from $16,920 to $17,040, after which $1 in benefits is withheld for every $2 earned above the limit. There is no limit for the amount of wages subject to the other portion of the FICA tax, the 1.45 percent Medicare tax.