2018 Social Security Payroll Tax Increase
Currently, Social Security is a payroll tax taken out of your paycheck each time you are paid. Only state and local government workers with their own pension plans are exempt from the Social Security tax, IF their pension plans are meant to replace Social Security. Unfortunately in 2018, there will be a roughly 10 million workers that will need to pay as much as $149 more in Social Security tax. As of today, workers pay 6.2% of their wages with the employers paying the remaining 6.2%. If you are self-employed, you are responsible for the entire 12.4%.
The more you make, the more you will be taxed, however there is a maximum amount for which you can be taxed, known as the Social Security wage base. In 2017, the amount was $127,200 and in 2018, it is scheduled to go up to $128,400. That is a $1,200 increase, but Social Security increases each year based on inflation.
To look at this a different way:
If you are an employee and make more than $128,400, you will see an increase of $74.40 this coming year. This accounts for roughly 10 million workers.
If you are self-employed and make more than $128,400, you will see an increase of $148.80 this coming year. This accounts for roughly 825,000 workers.
If you make below the $128,400 limit, you will not see any tax increases and will continue paying the 6.2% or 12.4% you normally do. Many times the Social Security wage base does not have an impact on employees and the tax increase isn’t discussed, however as a business owner, you should be aware of this increase.
HR Ledger can help.
HR Ledger monitors your payroll as well as the correct withholdings from each paycheck to your employees. Knowing you have someone you trust behind the scenes so you don’t have to continually educate yourself in payroll instead of running your business is extremely helpful. HR Ledger is a great resource to help you free up your time!
Please call Malcolm or Scott today at 800-451-1136.