On Wednesday, the Social Security Administration (SSA) announced that the wage base above which taxes for old age, survivors, and disability insurance (OASDI) are not due will increase from $113,700 to $117,000 in 2014. The new rate means employees will pay a maximum of $7,254 of OASDI in 2014, with employers paying an equal amount. According to the SSA, 10 million of the estimated 165 million workers who will pay OASDI tax in 2014 will exceed the higher wage base.
The SSA reminded taxpayers that the Medicare hospital insurance (HI) portion of the tax, which is also paid by employers and employees, has no wage limit. It applies to all wages at a rate of 1.45%—unchanged from 2013. The new additional Medicare tax of 0.9% also applies to wages in excess of $200,000 for single taxpayers and $250,000 for married taxpayers filing jointly, but there is no employer portion for this tax, although employers must withhold the employee portion.
The SSA announced a cost-of-living increase for Social Security benefits of 1.5% that will take effect next year. The amount of wages under which domestic employees are not subject to Social Security taxes in 2014 increases to $1,900 and is $1,600 for election officials and election workers.
— Sally P. Schreiber ( email@example.com ) is a JofA senior editor.