2016 Social Security wage base is released

By Sally P. Schreiber, J.D.

The Social Security Administration announced that there would be no increase in the amount of wages subject to Social Security taxes (old age, survivor, and disability insurance) for 2016. (There is no limit on the amount of wages subject to the Medicare tax.)

Because the consumer price index did not increase from the third quarter of 2014 to the third quarter of 2015, there will be no cost-of-living adjustment (COLA) in the amount of Social Security benefits paid next year. When there is no COLA in Social Security benefits, an increase in the amount of wages subject to Social Security taxes is prohibited by law. So the current $118,500 maximum amount of earnings subject to Social Security taxes will also apply in 2016.

Among the other unchanged limits is the amount a worker under full retirement age can earn before he or she has Social Security benefits reduced. The limit remains at $15,720 a year, after which $1 in benefits is withheld for every $2 earned above the limit.

Sally P. Schreiber (sschreiber@aicpa.org) is a JofA senior editor.

SPONSORED REPORT

How the election may affect taxation of business income

This report summarizes recent proposals to reform the U.S. business income tax system and considers the path to enactment of any such legislation.

VIDEO

How to Excel pivot a general ledger

The general ledger is a vast historical data archive of your company's financial activities, including revenue, expenses, adjustments, and account balances. J. Carlton Collins, CPA, shows how to prepare data for, and mine data with, PivotTables.

QUIZ

Did you follow 2016’s biggest accounting news?

CPAs will remember 2016 as a year of new standards and new faces. How well did you follow the biggest accounting events? The 7 questions in this quiz will help you find out