(Five Minute Tax Briefing, Thompson Reuters; Published October 2016)
The Social Security Administration (SSA) announced that the maximum earnings subject to the Social Security component of the FICA tax will remain at $118,500 for 2016. This means, that for 2016, the maximum Social Security tax that employers and employees will each pay is $7,347 ($118,500 x 6.2%), and a self-employed person with at least $118,500 in net self-employment earnings will pay $14,694 for the Social Security part of the self-employment tax. The Medicare component remains 1.45% of all earnings, and individuals with earned income of more than $200,000 ($250,000 for married couples filing jointly) will pay an additional 0.9% in Medicare taxes. Other 2016 cost-of-living adjustments announced by the SSA are available at www.ssa.gov/news/press/factsheets/colafacts2016.html.