2022 Maximum Earnings Subject to Social Security Payroll Tax Released
One of the ways employers can sense that the holiday season is right around the corner is when we begin to get notifications from various federal and state agencies about the caps, limits, adjustments and changes. So, to get us started with some early holiday cheer, on October 13th, the Social Security Administration released the 2022 maximum earnings subject to the Social Security payroll tax.
The maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $147,000 from $142,800, effective January 1, 2022. The SSA’s press release can be found here: Press Release | Press Office | SSA, and a fact sheet summarizing the changes for 2022 can be found here: 2022 Social Security Changes – COLA Fact Sheet.
Employers and employees each pay a FICA tax comprising a Social Security tax of 6.2 percent on the employee’s earnings up to the wage base ($147,000 in 2022), plus a Medicare tax of 1.45 percent on all earnings. For those keeping score at home, the maximum possible Social Security tax in 2022 will be $9,114. The percentages are determined annually, and the latest rates can be located at https://www.ssa.gov/news/cola.
There is an Additional Medicare Tax of 0.9 percent on earnings over $200,000 for individual taxpayers and $250,000 for married couples filing jointly; for married couples filing separately, the threshold amount is $125,000. There is also a 3.8 percent Medicare tax assessment on certain investment income for individuals earning over $200,000 and married couples who file jointly earning over $250,000.