Image courtesy of user Geralt on Pixabay.com

Image courtesy of user Geralt on Pixabay.com

The term Social Security Wage Base refers to the maximum amount of wages or self-employment income on which the 6.2% Social Security tax is based.

For 2015 and 2016, that amount is $118,500.

Example

Joe works at a job and earns $125,000. Social Security tax is assessed on the first $118,500 of Joe’s wages, but not on any wages past that amount. Additionally, Joe’s employer pays the matching portion of Social Security tax on the first $118,500 of Joe’s wages, but not on any wages past that amount.

Compare this with the 1.45% Medicare tax, which is assessed on ALL wages, with no maximum cap.

For simplified definitions of dozens of other tax terms, check out the Glossary page on this website.

“This blog post, along with comments that may follow, should not be considered tax advice. Before you make final tax or financial decisions, please secure a professional tax advisor to give you advice about your unique situation. To secure Jason as your accountant, please click on the ‘Services’ link at the top of the page.”