When planning for 2017, employers should note a larger than normal increase in the social security earnings cap. In 2017, the earnings cap for social security taxes is set to increase 7.3 percent.
- Current Social Security Earnings Limit: $118,500
- 2017 Social Security Earnings Limit: $127,200
This large increase is due in part to the cap remaining unchanged in 2016. Social Security recipients did not receive a cost of living increase last year and Federal law prevents the social security earnings cap from increasing without a corresponding cost of living increase for recipients of social security benefits. In 2017, the increase in benefits is .3%
The increase in the earnings cap will mean more payroll taxes for both employees and employers as the 6.2% social security payroll tax employers share with employees will be applied to these additional earnings. The Social Security Administration estimates this increase will affect approximately 12 million of the 173 million workers who pay Social Security taxes.
For more information, read “Top Social Security Tax Jumps 7% For 2017, But Benefits Rise Just 0.3%” on the Forbes website.
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