Tuesday, May 01, 2012
The Social Security wage base is projected to increase from $110,100 to $113,700 in 2013. Social security taxes are collected on wages up to this maximum - once wages go over the maximum no further taxes are imposed. Normally, those wages are subject to OASDI (social security) taxes of 6.2% imposed on the employer and the same percent imposed on the employee. However, in 2012 the rate on employees was cut to 4.2%. Self-employed persons pay 12.4% (10.4% in 2012).
Therefore, higher earned income persons can expect a double hit in 2013 - an increase in the wage base (that is, more wages subject to tax) and a return to normal OASDI rates. Of course, this is in addition to the major tax hikes set for 2013 per the expiration of the Bush tax cuts.