Social Security Wage Increase

Social Security Benefits Increase For 2022 

Just this month, the Social Security Administration announced that the 2022 Social Security wage base will increase $4,200 from $142,800 to $147,000. This cost-of-living adjustment (COLA) equates to a 5.9 percent increase to monthly checks in 2022. The adjustment will be considered the largest boost in decades. The Washington Post stated, “The adjustment will be made for 64 million Social Security beneficiaries as well as eight million Supplemental Security Income recipients. Some Americans receive both benefits.” The adjustment is calculated based on the Labor Department’s measure of inflation faced by blue-collar workers.  

Because of the wage base increase, higher-earning individuals will then be taxed a larger amount. “The maximum Social Security tax per worker will be $18,228 or a maximum $9,114 withheld from a highly paid employee’s 2022 paycheck.” Social Security tax is one of two taxes all employers are required to withhold under the Federal Insurance Contributions Act (FICA), with the other being Medicare Tax. Because FICA tax rates are statutorily set, they can only be changed through new tax law.  

Social Security is the biggest program funded by payroll taxes paid by both workers and employers, along with being the largest source of retirement income for most older Americans. Some think that this could be tied with increases in healthcare and housing costs. The price of prescription drugs has also gone up exponentially.  

Ensuring that you have the most up-to-date legislation for your payroll can be a heavy burden that requires significant time and effort. As your trusted payroll partner, GMS can automate the process and help ensure you are compliant with all federal, state, and local regulations.  

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