On Oct. 12, 2023, the Social Security Administration (SSA) announced the 2024 wage base. The annual wage base limit is the maximum amount of employee wages that are subject to the social security tax for the calendar year.
The Details:
The 2024 social security wage base will be $168,600, which is an increase of $8,400 from $160,200 in 2023.
There is no limit to the wages subject to the Medicare tax and therefore all covered wages are subject to the 1.45% tax. As in 2023, wages paid in excess of $200,000 in 2024 will be subject to an extra 0.9% Medicare tax withholding that will only be withheld from employees' wages as employers do not pay the extra tax. Married couples filing jointly with earned income of more than $250,000 will also be subject to the additional 0.9% tax.
The Federal Insurance Contributions Act (FICA) tax rate, which is the combined social security tax rate of 6.2% of covered wages (up to the social security wage base) and the Medicare tax rate of 1.45% (on all covered wages), will be 7.65% for 2024. The maximum social security tax employees and employers will each pay in 2024 is $10,453.20. This is an increase of $520.80 from $9,932.40 in 2023.
Next Steps:
Effective for wages paid on or after Jan. 1, 2024, employers must withhold FICA taxes as outlined above.
For a copy of the SSA Fact Sheet, please click on the link provided below:
https://www.ssa.gov/news/press/factsheets/colafacts2024.pdf
Have Questions?
Please contact your dedicated service professional with any questions.