2016 Social Security Wage Base Will Remain at $118,500
While the Social Security Act sets forth an automatic increase in Social Security and Supplemental Security Income (SSI) benefits when the Consumer Price Index (CPI) warrants, the Social Security Administration (SSA) has announced that the Social Security wage base will stay at $118,500 for 2016. That means that the tax will be 6.2% on the first $118,500 of wages, thereby capping the tax at $7,347.00. That's in addition to the 1.45% Medicare tax on the first $200,000 of wages (MFJ) and the 2.35% Medicare tax (the normal 1.45% Medicare tax plus the additional 0.9% Obamacare tax) on all wages exceeding $200,000. For self-employed persons, the tax is 12.4% on the first $118,500 of self-employed income (max. tax of $14,694.00) plus 2.9% on the first $200,000 of self-employment income, plus 3.8% on all self-employment income exceeding $200,000. Self-employed persons can still deduct 50% of their self-employment tax "above-the-line" in arriving at adjusted gross income.
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