December 17, 2018

Social Security Wage Base Increases to $132,900 for 2019

  • The Social Security wage base increases for 2019.
  • The 2019 amount exceeded the SSA projection by $600.

The Old-Age, Survivors, and Disability Insurance taxable wage base is to increase to $132,900 in 2019, up from $128,400 in 2018, the Social Security Administration said Oct. 11.

The maximum 2019 OASDI portion of the Federal Insurance Contributions Act tax payable by each employee is $8,239.80, or 6.2 percent of the wage base, up from $7,960.80. Employers match the employee amount with an equal contribution. The Medicare or Hospital Insurance tax rate remains 1.45 percent and is applicable to all wages paid during the year. An additional 0.9 percent in Medicare taxes applies to individuals with earned income of more than $200,000, and $250,000 for married couples filing jointly, the agency said.

A year ago, the SSA reduced the taxable wage base to $128,400 from $128,700, an amount the agency announced Oct. 13, 2017. The decrease, which was announced Nov. 27, stemmed from corrected Forms W-2, Wage and Tax Statement, that were provided in late October by a large payroll-service provider.
The 2019 increase is $600 more than the amount SSA projected earlier this year.

For 2019, an employee who earns $132,900 is subject to a total FICA tax of $10,166.85 ($8,239.80 + $1,927.05).

The domestic employee coverage threshold amount is to be $2,100 in 2019, unchanged from 2018. The coverage threshold amount for election officials and election workers remains at $1,800, the SSA said.

Employees are to earn one credit for each $1,360 of earnings paid in 2019, up from $1,320, the SSA said. Employees may earn a maximum of four credits in a year. Those who receive the maximum wages taxable under Social Security in any year also receive four coverage credits. Employees must be credited with a certain amount of work earned under Social Security to qualify for benefits.

The Social Security earnings limit for workers who reach full retirement age increases to $46,920 in 2019, up from $45,360 in 2018, the SSA said. The $46.920 earnings limit applies only to workers who retire in the year they reach retirement age.

After earnings reach the limit, $1 in benefits is withheld for every $3 in earnings exceeding the limit only in those months preceding the month full retirement age is reached. There is no limit on earnings from the full retirement-age month and later. The earnings limit for workers who retire before reaching full retirement age increases to $17,640 in 2019, up from $17,040, the SSA said.

One dollar in benefits is to be withheld for every $2 in earnings that exceed the limit, the SSA said. The SSA also said a 2.8 percent cost-of-living increase is to take effect in 2019, affecting several thresholds for benefits and coverage. The cost-of-living adjustment is linked to the increase in the consumer price index from the third quarter of 2017 through the third quarter of 2018, as determined by the Labor Department Bureau of Labor Statistics.

Reproduced with permission. Published Oct. 11, 2018. Copyright 2018 by The Bureau of National Affairs, Inc. (800-372-1033) <http://www.bna.com>
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