Social Security: What Is the Wage Base for 2023?
The Board of Trustees of the Social Security Trust Fund released its “2022 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds” on June 2, increasing the Social Security wage base to $155,100.
The wage base limit is the maximum wage that’s subject to the tax for that year, according to the Internal Revenue Service (IRS). The Social Security Administration (SSA) explains on its website that this limit changes each year with changes in the national average wage index — and that this amount is also commonly referred to as the taxable maximum.
“Social Security’s Old-Age, Survivors, and Disability Insurance (OASDI) program limits the amount of earnings subject to taxation for a given year. The same annual limit also applies when those earnings are used in a benefit computation,” the SSA detailed.
According to the annual report, for 2023, the wage base will be $155,100 — up from $147,000 in 2022, and $142,800 in 2021.
The SSA provides three forecasts for the wage base (intermediate, low and high cost) and all predict an increase to $155,100 in 2023.
The OASDI tax rate for wages paid in 2022 is set by statute at 6.2% for employees and employers, so an individual with wages equal to or larger than $147,000 would contribute $9,114 to the OASDI program in 2022, and his or her employer would contribute the same amount. Meanwhile, in 2022, the OASDI tax rate for self-employment income is 12.4%.
The formal announcement of the 2023 wage base will not come until mid-October, American Payroll reports, adding that the projections, “which are only an indication of the expected trend, are based on Social Security program provisions in current law and do not take into account any changes in these provisions that might be made in the future.”
The board said in the report that the assumptions were set in mid-February 2022 and developments since then “have added to the uncertainty regarding the path of the COVID-19 pandemic and the economy. The Trustees will continue to monitor these and any future developments and modify the projections in later reports as appropriate.”
More From GOBankingRates