It has been official for a while now. The Social Security wage base is planned to increase from the current level of $110,000 to $113,700 in 2013.
Again, social security taxes are collected on wages up to this maximum – once wages exceed the maximum no further taxes are imposed. Normally, those wages are subject to OASDI (social security – formerly known as old age, survivors, and disability insurance) taxes of 6.2% imposed on the employer and the same percent imposed on the employee. However, in 2011 and again in 2012 the rate on employees was cut to 4.2%. Self-employed persons pay 12.4% (10.4% in 2012). Congress has made no move as of yet for any changes to extend for 2013.
Business owners and high income earners can expect a whack in 2013 – an increase in the wage base (that is, more wages subject to tax) and a return to normal OASDI rates a 2% tax increase; the probable expiration of the Bush tax cuts and the Medicare surtax.
To discuss the effects on your personal situation let us know how we may assist, beyond paying your tax bill for you.