Time to update your payroll system: SSA has announced the 2024 Social Security taxable wage base.
Next year’s number will increase to $168,600 – that’s $8,400 more than the current $160,200.
So, the official projection released earlier this year ($167,700) was slightly low, although not too far off.
The Social Security tax, as set by Congress, will remain 6.2% for employees and employers. That means if an employee earns $168,600 (or more) next year, you’ll withhold $10,453.20. Of course, your company will pay that same amount for the tax.
The 1.45% Medicare portion of FICA is unchanged, as is the 0.9% Additional Medicare Tax (AMT). The AMT should be withheld if someone’s earnings exceed $200,000 ($250,000 for married couples filing jointly).
Working and receiving Social Security
Do you have employees on the payroll who have already begun to receive Social Security retirement benefits? If so, workers who haven’t reached full retirement age may prefer to keep their earnings under the annual limit set by SSA, as exceeding that limit will cause the agency to reduce their retirement benefits.
SSA released numbers related to that for 2024:
- For someone who won’t yet reach retirement age in 2024, the limit will be $22,320, up from $21,240. For every $2 earned above the limit, SSA will deduct $1 from his or her benefit payments.
- As for an individual who’ll reach retirement age in 2024, the limit is $59,520, up from $56,520. For every $3 someone earns above that limit, SSA will reduce that person’s benefits by $1.
Be aware that when determining how much someone has earned for these purposes, SSA includes bonuses, commissions and vacation pay.
Also remind employees that once they reach full retirement age, the limit regarding how much they can earn on the job is lifted.
As for how much retirement benefits will increase in 2024 due to the cost-of-living adjustment (COLA), that update was also released by SSA. SSA said there will be a 3.2% increase in benefits. That’s a far cry from last October’s 8.7% COLA announcement.
