2018 wage base for Social Security taxes will increase slightly this year

The Social Security Administration (SSA) announced in October that the maximum amount of wages in 2018 subject to the 6.2% Social Security tax (old age, survivor, and disability insurance) rises from $127,200 to $128,400, an increase of a little more than 1% (Social Security Administration Fact Sheet — 2018 Social Security Changes, available at www.ssa.gov.) 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.