Social Security Wage Base
The taxable wage base for Social Security’s Old-Age, Survivors, and Disability Insurance (OASDI), or FICA will increase for 2012, as announced by the Social Security Administration. The 2012 taxable wage base will be $110,100. The taxable wage base for the previous 3 years was $106,800. There has been an increase in the taxable wage base every year since 1950, with the exception of 2009, 2010, and 2011.
Social Security Tax Rate
The Social Security tax rate for 2011 is 4.2 percent for employees and 6.2 percent for employers. The 4.2 percent for employees is a reduced rate from 6.2 percent. The 2011 rates for self-employed individuals is10.4 percent, which is reduced from 12.4 percent.
This one year rate reduction came from The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. Prior to 2011, the Social Security tax rate had been unchanged since 1990. These temporary reduced rates will return to 6.2 percent for employees and 12.4 percent for self-employed individuals for 2012, without further changes in the law.
However, current proposals are calling for reductions in the Social Security rate for both the employee and employer portions of the tax for 2012. We will update with rate information as soon as it becomes available.