The wage base for determining the maximum amount of income subject to Social Security taxes will be $110,100 for the year 2012, the first increase in the wage base since 2009. For the years 2009 through 2011, the maximum wage base was set at $106,800.
The Social Security tax rate for 2012 will revert back to its normal rate of 6.2% for employees or 12.4% for self-employed persons. For 2011 there was a one-time reduction in the Social Security tax rate to 4.2% for employees and 10.4% for self-employed persons.
From a planning perspective, more Social Security taxes will be automatically deduction from paychecks starting in January as the rate reverts back to 6.2%, and people earning more than the old $106,800 wage limit will see more of their wages subject to Social Security withholding. Self-employed persons, similarly, may need to increase their estimated tax payments for 2012 to take into account the higher self-employment tax rate.
Thank you for your blog. I was thinking the other day that there needed to be an increase to the Social Security wage base.
I’m glad the gov. gets to take more of my money, that I will never see by the time I retire. Thanks. This sucks.