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By Keith Hill
The Old-Age, Survivors, and Disability Insurance taxable wage base is to increase to $128,700 in 2018, up from $127,200 in 2017, the Social Security Administration said Oct. 13.
The maximum 2018 OASDI portion of the Federal Insurance Contributions Act tax payable by each employee is $7,979.40, or 6.2 percent of the wage base, up from $7,886.40. Employers match the employee amount with an equal contribution.
The Medicare or Hospital Insurance tax rate remains 1.45 percent applicable to all wages paid during the year. An employee who earns $128,700 in 2018 is subject to a total FICA tax of $9,845.55 ($7,979.40 + 1,866.15). About 12 million workers out of the estimated 175 million who are to pay Social Security taxes in 2018 are to pay more because of the increase in the taxable maximum, the SSA said.
An additional 0.9 percent in Medicare taxes applies to individuals with earned income of more than $200,000, and $250,000 for married couples filing jointly, the agency said.
For 2018, the domestic employee coverage threshold amount is to be $2,100, up from $2,000, and the coverage threshold amount for election officials and election workers remains at $1,800, the SSA said.
Employees are to earn one credit for each $1,320 of earnings paid in 2018, up from $1,300, the SSA said. The maximum number of credits that employees may earn in a year is four. Those who receive the maximum wages taxable under Social Security in any year also receive four coverage credits. Employees must be credited with a certain quantity of work earned under Social Security to qualify for benefits.
The Social Security earnings limit for workers who reach full retirement age increases to $45,360 in 2018, up from $44,880, the SSA said. The $45,360 earnings limit applies only to workers who retire in the year in which they reach retirement age. Once an individual earns more than the limit, $1 in benefits is to be withheld for every $3 in earnings exceeding the limit only in those months preceeding the month full retirement age is reached. There is no limit on earnings from the full retirement-age month and later.
The earnings limit for workers who retire before reaching full retirement age increases to $17,040 in 2018, up from $16,920, the SSA said. One dollar in benefits is to be withheld for every $2 in earnings that exceed the limit, the SSA said.
The SSA also said a 2 percent cost-of-living increase is to take effect in 2018, affecting several thresholds for benefits and coverage. The cost-of-living adjustment is linked to the increase in the consumer price index as determined by the Labor Department Bureau of Labor Statistics.
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
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