In a recent article, we covered FICA and what exactly it entails. One of the items mentioned was a Social Security Wage Base that applies to workers that earn over a specific amount of money. This morning, October 22, the IRS announced important changes to this wage base for the year 2015.
The wage base for Social Security will increase $1,500 to $118,500 in 2015, from $117,000 in 2014. The Medicare tax will be the same as prior years, with all wages being subject to the 1.45% tax. Also as in prior years, the earners making more than $200,000 in 2015 with be subject to the extra 0.9% Medicare tax.
The percentage values of both components of FICA will not change in the year 2015 – Social Security will still be withheld at a rate of 6.2% up to the wage base, and Medicare will be withheld at a rate of 1.45%. Regarding the new wage base, the maximum amount of Social Security tax employees and employers will pay in 2015 is $7,347.00, up $93.00 from 2014.
The wage base is the same for self-employed people, but there will be no limit on the Medicare tax of self-employed individuals. This means that the self-employment tax rate will be 15.3% (remember, self-employed individuals are responsible for both the employee contribution, and the employer contribution) up to the Social Security wage base of $118,500. The maximum amount withheld from a self-employed person will be $14,694 in 2015.
For more information on the wage base increase, please click here.
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