2017 Social Security Wage Base

 

The Social Security Administration (SSA) released updated information about payroll taxes on Tuesday, October 18, 2016.  Individuals earning above $118,500 in wages should expect to have more money taken out in payroll taxes in 2017.

For 2017, up to $127,200 of wages will be taxable for social security.  This is an increase from the 2016 limit of $118,500.  As in past years, all wages will be subject to medicare regardless of the social security wage base, and wages over $200,000 will be subject to a medicare surtax at .09%.

If you are a business owner with discretion over salaries, you can use this information for planning purposes.  If you are trying to increase your social security benefits for your or your spouse, you might want to increase both salaries to $127,200.  On the other hand, you could reduce payroll taxes by increasing one salary over $127,200 and decreasing the other – as long as both remain within reasonable compensation limits.  

Feel free to contact us if you would like further explanation or tax planning advice.