New FICA wage limit for 2017
The new wage limit that is subject to the federal Old-Age, Survivors, and Disability Insurance (OASDI) has increased to $127,200 for the 2017 tax year, up from $118, 500 in 2016. Also known as Social Security, this program taxes all workers who have earned income, such as payroll wages or self-employment income.
The OASDI tax rate for wages paid in 2017 is set by statute at 12.4 percent. 6.2 percent is paid by the employee, and 6.2 percent is paid by the employer. This means that an individual with wages equal to or larger than $127,200 would contribute $7,886.40 to the OASDI program in 2017, and his or her employer would contribute the same amount. A self-employed person would pay both the employee and the employer portions themselves.
Medicare tax, which together with OASDI comprises “FICA” on your pay stub, does not have a wage limitation. Medicare tax remains, as in years past, at 2.9 percent of earned income, where 1.45 percent is paid by the employee, and 1.45 percent is paid by the employer. Workers are also required to pay an additional .9 percent Medicare tax for earned income above $200,000 ($250,000 if married filing jointly).
For more information, visit the Social Security Administration website. If you have any questions regarding how this may affect you, please contact your WK advisor at (573) 442-6171 or (573) 635-6196.
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