Social Security Administration announces small increase in 2018 wage base

By Sally P. Schreiber, J.D.
Updated: 

The Social Security Administration (SSA) announced on Friday that the maximum amount of wages in 2018 subject to the 6.2% Social Security tax (old age, survivor, and disability insurance) will rise from $127,200 to $128,400, an increase of a little more than 1%. By comparison, the 2017 wage base increased more than 7% over the 2016 wage base.  

The maximum amount of Social Security tax a taxpayer could pay will therefore increase from $7,886.40 in 2017 to $7,960.80 in 2018, an increase of $74.40.

The SSA also announced that Social Security beneficiaries will get a 2% increase in benefits in 2018, after receiving a 0.3% increase in benefits in 2017 and no increase in 2016. The average retiree will receive an increase of $27 a month.

Among the other increases is the amount a worker under full retirement age can earn before he or she has Social Security benefits reduced. The limit increases from $16,920 for 2017 to $17,040 for 2018, after which $1 in benefits is withheld for every $2 earned above the limit.

There is no limit on the amount of wages subject to the other portion of the FICA tax, the 1.45% Medicare tax.

[Update: The Social Security Administration changed the 2018 wage base amount from $128,700 to $128,400 on Nov. 27, 2017.]

Sally Schreiber (Sally.Schreiber@aicpa-cima.com) is a JofA senior editor.

SPONSORED REPORT

Taking stock of artificial intelligence

Artificial intelligence is either the greatest thing to ever happen to human work or the dread of our existence. This independently written report explores how AI will reshape the workplace and how analytically minded individuals can stand out.

PODCAST

How tax reform will impact individual taxpayers

Amy Wang, a CPA who is a senior technical manager for tax advocacy at the AICPA, answers to some of the most common questions on how the new tax reform law will impact individual taxpayers.