Social Security Tax Wage Base for 2023 Kiplinger Kiplinger is supported by its audience. When you purchase through links on our site, we may earn an affiliate commission. Here's why you can trust us.

Social Security Tax Wage Base Jumps Nearly 9% for 2023

Wealthier Americans will have more Social Security taxes taken from their paychecks next year because more of their income will be subject to the tax. (opens in new tab) (opens in new tab) (opens in new tab) Newsletter sign up Newsletter (Image credit: Getty Images) By Rocky Mengle last updated 21 October 2022 Many people don't realize that the Social Security tax that's withheld from each paycheck stops once your income exceeds a certain amount known as the "Social Security wage base." For instance, the Social Security wage base for 2022 is $147,000. So, if your income exceeds that amount this year, you don't pay the Social Security payroll tax on anything above $147,000. (Note: Social Security taxes are also known as Old-Age, Survivors, and Disability Insurance taxes, or OASDI taxes.)

10 Things Every Worker Needs to Know About the W-4 Form This can be a significant tax cut for people earning more than the wage base. The tax rate for an employee's portion of the Social Security tax is 6.2%, so that's a pretty good savings for higher-income workers. (Your employer also pays 6.2% on any taxable wages, and you pay the full 12.4% if you're self-employed…although self-employed people can deduct part of that amount). For example, an employee with an annual salary $10,000 above the wage base saves $620, a worker with wages $30,000 over the base gets a $1,860 tax break, wages exceeding the base by $50,000 results in a $3,100 tax cut, and so on and so on. The more you make in excess of the wage base, the more money you save on Social Security taxes. However, the Social Security wage base goes up each year that the national average wage index (opens in new tab) increases. When that happens – which is almost every year – more income is subject to the Social Security tax. Over the past five years, the wage base has gone up an average of $3,960 per year. But the wage base is going from $147,000 in 2022 to $160,200 in 2023. That's a year-over-year increase of $13,200 – the largest ever (just under a 9% increase) by a wide margin.

Subscribe to Kiplinger s Personal Finance

Be a smarter, better informed investor. Save up to 74%

Sign up for Kiplinger s Free E-Newsletters

Profit and prosper with the best of Kiplinger's expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail. Profit and prosper with the best of Kiplinger's expert advice - straight to your e-mail. Sign up As a result, the maximum Social Security tax possible jumps from $9,114 to $9,932. So, for people making over $160,200 in 2023, they will be paying $818 more in Social Security taxes next year than they would have paid if the wage base remained at $147,000 ($573 more if the wage base grew at the average rate over the past five years). That's a significant increase by historical standards. Of course, people earning under $160,200 in 2023 will have to pay Social Security taxes on all of their wages. Plus, if you make between $147,000 and $160,200 in 2023, you may be paying Social Security taxes on all your income for the first time (or the first time in a while).

Exemptions From Social Security Taxes

Some people aren't required to pay Social Security taxes. For instance, exemptions from Social Security taxes may be available if certain requirements are met for:Ministers and church employees;Members of certain religious groups (e.g., the Amish and Mennonites) who waive their rights to all Social Security benefits;Students employed by their school;Foreign students temporarily in the U.S. under certain types of visas;Minors employed in a family business;Non-citizens working for a foreign government in the U.S.; andSelf-employed people with less than $400 of self-employment income. Other exemptions may also apply.

Other Taxes Withheld From Your Paycheck

Take a look at your most recent pay stub. You'll notice that there are other taxes withheld from your paycheck other than the Social Security tax. For example, federal income tax is withheld from your pay, because Uncle Sam like to get his cut a little bit at a time (the amount is based on what you reported to your employer on Form W-4). State income taxes will also be withheld, unless you live in a state without an income tax.

401(k) Contribution Deadline Coming Soon You also have a Medicare tax taken out of your wages. This tax is equal to 1.45% of your pay. Unlike the Social Security tax, there is no cap on wages to which the Medicare tax applies. So, even if you earn more than $160,200 in 2023, you'll pay the 1.45% Medicare tax on all your wages. In fact, if you make too much money, you have to pay even more in Medicare taxes. That's because workers must also pay an additional 0.9% Medicare surtax on wages (and self-employment income) over $200,000 for singles and $250,000 for married couples filing a joint tax return ($125,000 for a married person filing a separate return). (Note: Together, Social Security taxes and Medicare taxes are also known as Federal Insurance Contributions Act taxes, or FICA taxes.)

10 Tax Planning Tips for the End of the Year Explore More Tax Tips Rocky MengleSenior Tax Editor, Kiplinger.comRocky is a Senior Tax Editor for Kiplinger with more than 20 years of experience covering federal and state tax developments. Before coming to Kiplinger, he worked for Wolters Kluwer Tax & Accounting and Kleinrock Publishing, where he provided breaking news and guidance for CPAs, tax attorneys, and other tax professionals. He has also been quoted as an expert by USA Today, Forbes, U.S. News & World Report, Reuters, Accounting Today, and other media outlets. Rocky has a law degree from the University of Connecticut and a B.A. in History from Salisbury University. Latest 4 Ways You Can Take Advantage of a Down Market With markets down for the year, it may seem that all the news is bad. But now could be a good time to make some profitable moves. By Adam Grealish • Published 11 November 22 New, Used or Leased: Is Now the Time to Buy an Electric Vehicle? The Inflation Reduction Act created new tax breaks for electric vehicles. Here's a guide to which EVs count and the best time to buy. By Rivan V. Stinson • Published 11 November 22 You might also like $2.04 Billion Powerball Lottery Jackpot Winner Will Have a Massive Tax Bill The $2.04 billion-dollar Powerball jackpot has its big winner and the federal government will get a big chunk of the prize from taxes. By Kelley R. Taylor • Last updated 11 November 22 New "Stimulus" Check 2022: Massachusetts Tax Refund Money is Being Sent Now Massachusetts will return nearly $3 billion to eligible taxpayers beginning in November. By Kelley R. Taylor • Last updated 9 November 22 What's the Standard Deduction for 2022 vs. 2023? Tax Breaks Most Americans claim the standard deduction on their federal tax return instead of itemized deductions. How much can you claim on your 2022 and 2023 returns? By Rocky Mengle • Last updated 9 November 22 What Are the Capital Gains Tax Rates for 2022 vs. 2023? capital gains tax The capital gains tax rate that applies to a capital gain depends on the type of asset, your taxable income, and how long you held the property sold. By Rocky Mengle • Published 3 November 22 Virginia 2022 "Stimulus" Tax Rebates Many eligible Virginians have received an up to $500 tax rebate check for 2022. By Kelley R. Taylor • Last updated 2 November 22 What Are the Income Tax Brackets for 2022 vs. 2023? tax brackets Depending on your taxable income, you can end up in one of seven different federal income tax brackets – each with its own marginal tax rate. By Rocky Mengle • Last updated 9 November 22 California Stimulus Checks: More Debit Cards Going Out This Week If your last name begins with F to M, a California stimulus payment debit card could be in your mailbox soon. By Rocky Mengle • Last updated 7 November 22 529 Plan Contribution Deadlines Coming Soon in Many States Year-end state deadlines for making 529 college savings plan contributions that can maximize state tax breaks, are coming soon. By Kelley R. Taylor • Last updated 28 October 22 View More ▸ kiplinger About Us (opens in new tab) Terms and Conditions (opens in new tab) Privacy Policy (opens in new tab) Cookie Policy (opens in new tab) Kiplinger is part of Future plc, an international media group and leading digital publisher. Visit our corporate site.
© Future US, Inc. Full 7th Floor, 130 West 42nd Street, New York, NY 10036.