On November 27, the Social Security Administration (SSA) announced that the 2018 social security wage base will be $128,400, not $128,700 as it previously reported on October 13. This is still an increase of $1,200 from $127,200 in 2017. The lower amount is due to approximately 500,000 Forms W-2c (correcting 2016 Forms W-2) submitted to the SSA in late October by a payroll service provider. The updated maximum social security tax employees and employers will each pay in 2018 is $7,960.80. This is an increase of $74.40 from $7,886.40 in 2017.
Pay News Now will continue to monitor any changes to the Social Security Wage Base.
On October 13, the Social Security Administration (SSA) announced that the 2018 social security wage base will be $128,700, an increase of $1,500 from $127,200 in 2017.
Below are the additional tax breakouts:
- Maximum social security tax - The maximum 2018 social security tax employees and employers will each pay is $7,979.40. This is an increase of $93, from $7,886.40 in 2017.
- Medicare tax - As in prior years, there is no limit to the wages subject to the Medicare tax; therefore, all covered wages are still subject to the 1.45% tax. As in 2017, wages paid in excess of $200,000 in 2018 will be subject to an extra 0.9% Medicare tax that will only be withheld from employees’ wages. Employers will not pay the extra tax. Note that the $200,000 threshold for the additional Medicare tax is not subject to adjustments for inflation.
- FICA (combined) tax - The 2018 FICA tax rate, which is the combined social security tax rate of 6.2% and the Medicare tax rate of 1.45%, will be 7.65% up to the social security wage base.
Board of Trustees’ Estimate
In its 2017 annual report, the Board of Trustees of the Social Security Trust Fund projected that the 2018 social security wage base would be $130,500, which is $1,800 more than the actual amount. Employers that budgeted for its 2018 FICA tax expense based on the trustees’ projection will need to go back and recalculate that number.
FICA Coverage Threshold for Domestic, Election Workers
The threshold for coverage under social security and Medicare for domestic employees (i.e., the “nanny tax”) will be $2,100 in 2018, up from $2,000 for 2017; the coverage threshold for election workers will remain unchanged at $1,800 in 2018.
APA members can read the SSA fact sheet on the “Forms” section of the APA's website. Pay News Now will continue to monitor or provide any updates.