SSA Fact Sheet, 2019 Social Security Changes
The Social Security Administration (SSA) has announced that the wage base for computing the Social Security tax (OASDI) in 2019 will increase to $132,900. This is up from $128,400 for 2018.
Observation: Last year, the wage base announced by the SSA in October—$128,700— was subsequently corrected in November after a national payroll service provider submitted approximately 500,000 corrected W2s to the SSA after the initial figure was issued.
The Federal Insurance Contributions Act (FICA) imposes two taxes on employers, employees, and self-employed workers—one for Old Age, Survivors and Disability Insurance (OASDI; commonly known as the Social Security tax), and the other for Hospital Insurance (HI; commonly known as the Medicare tax).
There is a maximum amount of compensation subject to the OASDI tax, but no maximum for HI.
For 2019, the FICA tax rate for employers is 7.65%—6.2% for OASDI and 1.45% for HI.
For 2019, an employee will pay:
- 6.2% Social Security tax on the first $132,900 of wages (maximum tax is $8,239.80 [6.2% of $132,900]), plus
- 1.45% Medicare tax on the first $200,000 of wages ($250,000 for joint returns; $125,000 for married taxpayers filing a separate return), plus
- 2.35% Medicare tax (regular 1.45% Medicare tax + 0.9% additional Medicare tax) on all wages in excess of $200,000 ($250,000 for joint returns; $125,000 for married taxpayers filing a separate return). (Code Sec. 3101(b)(2))
For 2019, the self-employment tax imposed on self-employed people is:
- 12.4% OASDI on the first $132,900 of self-employment income, for a maximum tax of $16,479.60 (12.40% of $132,900); plus
- 2.90% Medicare tax on the first $200,000 of self-employment income ($250,000 of combined self-employment income on a joint return, $125,000 on a separate return), (Code Sec. 1401(a), Code Sec. 1401(b)), plus
- 3.8% (2.90% regular Medicare tax + 0.9% additional Medicare tax) on all self-employment income in excess of $200,000 ($250,000 of combined self-employment income on a joint return, $125,000 for married taxpayers filing a separate return). (Code Sec. 1401(b)(2))
Illustration: Self-employed workers deduct half of their self-employment tax above-the-line in arriving at adjusted gross income.
References: For FICA tax, see FTC 2d/FIN ¶ H-4545; United States Tax Reporter ¶ 31,114.
