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.
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.