The Social Security taxable wage base for 2014 increases to $117,000 from $113,700 in 2013, the Social Security Administration has announced.
The maximum 2014 Social Security tax payable by each employee is $7,254, or 6.2 percent of the wage base. Employers match the employee amount with an equal contribution. Of the estimated 165 million workers who are to pay Social Security taxes in 2014, about 10 million would pay higher taxes because of the higher taxable wage base, SSA said.
With respect to the Medicare portion of the FICA taxes, there is no wage base and all wages earned are subject to the Medicare tax, which also is paid by employers and employees. Each pays at a 1.45 percent rate, although the Affordable Care Act included a provision in which employees pay an additional 0.9 percent on wages greater than $200,000.
Social Security also said a 1.5 percent cost-of-living increase amount is to take effect, affecting several thresholds for benefits and coverage. The Social Security tax annual coverage threshold amount for domestic employees for 2014 increases to $1,900 and remains at $1,600 for election workers.