The Social Security Administration (SSA) estimates that around 66 million people earned monthly Social Security benefits worth $1,681 on average last year.
For 2023, the cost of living adjustment (COLA) is set at 8.7 percent. This implies that recipients of Social Security will receive higher monthly benefits. Due to the COLA, benefit recipients will begin receiving a little higher sum of $1,827.
“This is a really exceptionally good news day for older Americans, because their COLA is going up, their [Medicare] premiums are going to go down, and that means a lot more money in everyone’s pocket every month,” Cristina Martin Firvida, vice president of government affairs at AARP, told CNBC in October.
A worker’s gross wages, salaries, and tips are used to calculate payroll taxes. The government receives these taxes on behalf of the employee once an employer withholds them. It has to be noted that the employer’s and employee’s Social Security tax rates are both set at 6.2 percent for 2023.
What is the maximum taxable amount for SS taxes?
The Social Security Administration (SSA) announced back in October that the maximum earnings subject to SS tax will increase from $147,000 to $160,200 this year.
“The social security wage base limit is $160,200,” reads the official IRS website.
“The Medicare tax rate is 1.45% each for the employee and employer, unchanged from 2022. There is no wage base limit for Medicare tax.
“Social security and Medicare taxes apply to the wages of household workers you pay $2,600 or more in cash wages in 2023. Social security and Medicare taxes apply to election workers who are paid $2,200 or more in cash or an equivalent form of compensation in 2023.”
This mean that the maximum amount of SS tax an employee will have withheld from their paycheck this year will be $9,932.