The 2014 Social Security wage base will be going up again (just like the 2013 Social Security wage base increase). The wage base in 2014 is $117,000. It’s an increase over the 2013 Social Security wage base, which was $113,700. The wage base increase follows an increase last year over the 2012 Social Security wage base, which was $110,100.

What is a Tax Wage Base?

Social security taxes, (or OASDI taxes) are the taxes that are taken from your paycheck to contribute to the social security program. However, there is a wage base limit, and earnings above this amount are not taxed.

The social security tax wage bases are per person, and are not impacted by a husband and wife who meet the wage base when adding their incomes together.

What Happens When You Reach the Social Security Limit?

Any earnings over the tax wage base are not subject to social security taxes. Reaching the taxable wage base allows you to take home more of your money in your paycheck and save on taxes.

In fact, I once had a professor in college, who used the social security wage base as an earnings goal each year, because once you earned money over the limit, it was like getting an automatic raise.

However, it’s also important to understand that those same limits will apply when you qualify for Social Security and your benefits are computed.

Social Security Tax Rate

The current social security tax rate is 6.2% of your earnings (or 12.4% for self employed tax), and unlike saving on income taxes, you can’t deduct retirement contributions to save on your social security taxes.

Update: The 2011 Payroll Tax Cut temporarily lowered the social security tax rate for the employee to 4.2% in 2011. The employer will still need to pay 6.2%. The payroll tax cut was extended for 2012. A 2013 payroll tax cut was not included in the Fiscal Cliff Deal.

The social security tax rate is separate from medicare taxes, currently at 1.45% (or 2.9% for self employed), which has no wage base limit, and will increase to 2.35% due to the new Health Care Reform Bill for high earners.

Wage Base History

Here are the social security taxable wage base limits for the last few years:

  • Wage base 2007: $97,500
  • Wage base 2008: $102,000
  • Wage base 2009: $106,800
  • Wage base 2010: $106,800
  • Wage base 2011: $106,800
  • Wage base 2012: $110,100
  • Wage base 2013: $113,700
  • Wage base 2014: $117,000

More on Social Security

COLA Adjustments. The Social Security Administration, also announced people receiving social security benefits will get a cost of living adjustment (or COLA) adjustment in 2014 of 1.5%. Social security benefits went up 1.7% in 2013. They increased 3.6% in 2012.

Not Just Retirement. Social security isn’t just for retirement. In fact, the entire acronym for OASDI tax is Social Security’s Old-Age, Survivors, and Disability Insurance.

Social Security Statements. Be sure to review your social security statement every year and make sure the earnings amounts are correct. Otherwise, An Administrative Error Could Cost You Your Retirement.

Social Security Taxes. If half of your social security benefits plus your other gross income is more than $25,000, you may have to pay income taxes on social security benefits.

More on Social Security Taxes






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Comments to Social Security 2014 Wage Base Increase

  1. Hello Madison!

    Thank you for this information–I haven’t paid too much attention to the social security tax in the past, and did not realize if you earned over a certain income, that income was not taxed! Nice to know.

    Amanda L Grossman

  2. Remember that as part of the extension of the “Bush tax cuts,” Congress decided to reduce the social security rate for employees for 2011 from 6.2% to 4.2%. Employers still have to pay 6.2%.

    Orlando CPA

    • am i understanding this right….the social security rate went down 2% but medicare tax rate went up from 1.45% to 2.35% so in actuality we will only see a total decrease of 1.10% in taxes in our paychecks

      LaLena

      • Not necessarily, it depends upon your income level. While the social security tax rate will drop in 2011 by 2%, the medicare tax rate will not go up until 2013 and then only on those who make more that $250,000 a year. Under the new law, starting in 2013, high-income individuals will pay another 0.9 percentage points — so their share will total 2.35% of their wages.

        Therefore, if you make less than $250,000, there is no increase. If you make more than that amount, then in 2013, depending on how much more than 250,000 you make, you could see any savings on social security tax more than eaten up by the smaller increase in medicare tax. This is because while there is presently a ceiling of $106,800 on Social Security Tax, there is no ceiling on Medicare tax.

        John Belcher


  3. I am on disabilty and want to know how much i can earn with out them cutting me off so 2010 was $1000dollars what is it for 2011

    Rebecca Sullivan

  4. Does the the 2% tax cut apply both to the Employee and the Employer’s matching portion?

    Michael

    • Michael,
      The 2% cut applies only to the employee portion.

      Madison

      • Thank you.

        Michael


  5. Will the temporary 2011 2% Soc. Sec. tax rate for employees mean I’ll have paid less into Soc. Sec. this year and it will be reflected in lower Soc. Sec. benifits when I’m eligible to retire?

    Anne Smith

    • Anne,
      Luckily social security benefits are based on your eligible income, not on the amount you paid in.

      So the 2% tax cut should not lower your benefits in the future.

      Obviously, with social security receiving less money, there’s a greater chance it’ll run out of money sooner, and they’ll have to change the formula in the future… but that’s a whole separate issue!

      Madison

  6. they said we may get a increase of 1.2% on our social security in 2013 how much is that in dollars

    elizabeth

    • how much will my increase be if i get for 2013

      elizabeth merideth

      • Hi Elizabeth,
        I have updated the article to include the increases for 2013 Social Security benefits.

        Madison


  7. will the base of $25,000 be increased based on any proposals at this time…it is still very low…

    Donald J Franza

  8. is there really a 1.2% increase for 2013 benefits?
    thank you

    Donald J Franza

    • Hi Donald,
      Actually, Social security benefits will go up 1.7% in 2013.

      Madison

  9. UNDER WHICH CATEGORY WILL I LOCATE THE CALENDAR STATING DATES SS WILL BE PAID IN 2013? THANX MUCH IN ADVANCE FOR YOUR ASSIST!!!

    V.L.

  10. I’m confused. First, I thought my SS check would be 2% less in 2013. Then, I read it will increase 1.7%. Which is it? I’m 72 and retired. It’s my only source of income.

    Thanks,
    Ed

    Ed

    • You will get a raise of 1.7. The 2% less is what employed taxpayers will pay.

      penny

  11. I have worked for two company this year. I have paided the max on ss. benfitis and asked the company i am working for now to stop holding out ss taxes. They said i have to max ss. befitis with them. How do i get the money back that i went over on.

    joey

    • joey,

      You get back excess social security taxes withheld when you file your tax return, line 69 (for the 2012 form 1040) is where you enter this.

      matthewd


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