Social Security Changes in 2023 What you need to know

Social Security Changes in 2023: What you need to know?

Introduction

Some new things are coming your way in regards to social security taxation in 2023. On October 13th, the Social Security Administration announced that the 2023 social security wage base will increase from the current $147,000 to $160,200.00, a $13,200 base increase. (The SSA fact sheet can be found here). There will be no changes made to medicare taxation as there is currently no wage limit and all covered wages are subject to the 1.45% tax. Wages in excess of $200,000 in 2023 will also remain subject to the additional medicare tax of 0.9% to only be withheld from employee’s wages and not subject to employer taxation.

Unlike the increased wage base, the Social Security tax rate of 6.2% will remain the same in 2023. This will make the maximum social security tax both employers and employees could potentially pay in 2023, $9,932.40, an annual increase of $818.40 from the 2022 maximum.

Self Employed?

For self employed individuals in 2023 the social security wage base will also increase to $160,200 with no limit on wages subject to Medicare tax. The self employed social security tax rate remains unchanged at 12.4% with a maximum tax liability of $19.860.80 annually.

Cost of Living Adjustment (COLA)

With the increase in the social security wage base also comes an increase to the benefit checks. The social security administration announced an increase to benefits checks of 8.7% to go into effect in 2023, an increase of 2.8% from the current year. To find more information on the increase in benefits please visit: https://www.ssa.gov/news/press/releases/2022/#10-2022-2

Table: Changes in the wage base and social security taxes in the past few years (1998-2023)

Year Wage Base Increase Maximum Social Security Employee Share Maximum Social Security Employer Share Maximum Total Contribution to Social Security
2023 $160,200 9.0% $9,932.40 $9,932.40 $19,864.80
2022 $147,000 2.9% $9,114.00 $9,114.00 $18,228.00
2021 $142,800 3.7% $8,853.60 $8,853.60 $17,707.20
2020 $137,700 3.6% $8,537.40 $8,537.40 $17,074.80
2019 $132,900 3.5% $8,239.80 $8,239 .80 $16,479.60
2018 $128,400 0.9% $7,960.80 $7,960.80 $15,921.60
2017 $127,200 7.3% $7,886.40 $7,886.40 $15,772.80
2016 $118,500 0.0% $7,347.00 $7,347.00 $14,694.00
2015 $118,500 1.3% $7,347.00 $7,347.00 $14,694.00
2014 $117,000 2.9% $7,254.00 $7,254.00 $14,508.00
2013 $113,700 3.3% $7,049.40** $7,049.40 $14,098.80
2012 $110,100 3.1% $4,624.20 * $6,826.20 $11,450.40
2011 $106,800 0.0% $4,485.60* $6,621.60 $11,107.20
2010 $106,800 0.0% $6,621.60 $6,621.60 $13,243.20
2009 $106,800 4.7% $6,621.60 $6,621.60 $13,243 .20
2008 $102,000 4.6% $6,324.00 $6,324.00 $12,648.00
2007 $97,500 3.5% $6,045.00 $6,045.00 $12,090.00
2006 $94,200 4.7% $5,840.40 $5,840.40 $11,680.80
2005 $90,000 2.4% $5,580.00 $5,580.00 $11,160.00
2004 $87,900 1.0% $5,449 .80 $5,449 .80 $10,899.60
2003 $87,000 2.5% $5,394.00 $5,394.00 $10,788.00
2002 $84,900 5.6% $5,263 .80 $5,263 .80 $10,527.60
2001 $80,400 5.5% $4,984.80 $4,984.80 $9,969.60
2000 $76,200 5.0% $4,724.40 $4,724.40 $9,448.80
1999 $72,600 6.1% $4,501.20 $4,501.20 $9,002.40
1998 $68,400 $4,240 .80 $4,240.80 $8,481.60

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