Social Security Administration (SSA) has announced several changes that will impact employers and employees in 2017.
Old-Age, Survivors, and Disability Insurance Wage Base (OASDI). The SSA has announced that the social security portion (OASDI) taxable wage base for 2017 will increase $8,700 to $127,200. The social security taxable wage base for 2016 is currently $118,500. The changes are based on the increase in the Cost of Living Adjustment (COLA) of .3 percent.
Social Security (OASDI) Tax Rate. The tax rate for 2017 will remain at 6.2 percent. The maximum social security tax payable by each employee in 2017 will be $7,886.40.
Medicare (HI). The Medicare portion of the Federal Insurance Contributions Act (FICA) remains at 1.45 percent with no wage base and all wages earned are subject to the tax. For 2017, the Additional Medicare Tax on employee wages in excess of $200,000 is subject to an additional tax of 0.9 percent. Employers are not required to pay this additional tax.
The FICA tax rate, which is the combined social security tax rate of 6.2% and the Medicare tax rate of 1.45%, will be 7.65% for 2017.
Self-Employed Individuals. The social security wage base for self-employed individuals in 2017 will also be $127,200. There is no limit on covered self-employment income that will be subject to the Medicare tax. The self-employment tax rate will be 15.3% (combined social security tax rate of 12.4% and Medicare tax rate of 2.9%) up to the social security wage base. The maximum social security tax for a self-employed individual will be $15,772.80.
Domestic and Election Workers. The threshold for coverage under social security and Medicare for domestic employees will be $2,000 in 2017, unchanged from 2016; and the coverage threshold for election workers will be $1,800 in 2017, up from $1,700 in 2016.
Click here for the Social Security Administration fact sheet and additional information.
ADP will adapt our payroll system to accommodate these changes for 2017. Please review additional communications providing details for the 2017 year to be published throughout the remainder of the year.