What We Can Expect For The Social Security Tax

The Social Security Administration has released the proposed figures for the increase in the wage base for taxation for 2012 and projected some figures for the years up to 2015.  This is the limited amount of income against which Social Security withholding tax is applied.

2009 – 2011

For 2009 through 2011, the wage base has been static – at $106,800 for each year.  The amount did not increase for these years since the average wage index (AWI) actually decreased from 2008 to 2009, and the modest increase in the index from 2009 to 2010 did not make up for the decrease in the prior year.  For 2011, the AWI is expected to increase once again, by 3.08%.  This sets the projected wage base for 2012 at $110,100, up a total of $3,300.

The Future

Future wage bases have been projected for the years up to 2015 as well:  for 2013, the base is projected at $113,100; for 2014, $117,600; and for 2015, $122,700.

Keep in mind that these are, at present, only projections.  The actual figures will be set in the fall, typically in October or November.

2% Reduction in SSA Withholding

Also – in 2012, the temporary 2% reduction in the Social Security withholding tax will expire, so if the projected wage base of $110,100 does go into play, then the maximum amount of Social Security withholding that you can be assessed for the 2012 tax year will be $6,826.20, up from $4,485.60 in 2011.

[See Jim’s article on why your paycheck is 2% bigger this year]

About the author

Jim Blankenship, CFP®, EA

Jim Blankenship is the founder and principal of Blankenship Financial Planning, Ltd., a financial planning firm providing hourly, as-needed financial planning and advice. A financial services professional for over 25 years, Jim is a CFP professional and has earned the Enrolled Agent designation, a designation that qualifies him as enrolled to practice before the IRS. Jim is also a NAPFA-registered financial advisor, which designates him as a Fee-Only Financial Advisor.

An IRA Owner's Manual
A Social Security Owner's Manual


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  • Robbie, the 4.2% withholding has been extended through the end of February. If nothing changes, it will increase at the beginning of March to 6.2%, but expect for something to be changed.

    Medicare withholding has not changed.


  • Will the percentage to be withheld from our employees paychecks for Social Security and Medicare stay the same in 2012? In 2011 we were withholding 4.2% for ss and
    1.45% for mc.

  • Carol,

    If you won’t miss the $$, go ahead and send it in. The problem is not revenue, it’s spending.

    Pay attention

  • Why can’t the maximum withholding be done away with. I heard someone say on TV that it would solve the deficit problem. I am divorced now and retired, but my exhusband used to make pretty good. I remember in the seventies the maximum amount on social security withholding was around $75,000.00. Around Aug. or Sept. they would stop deducting social security from his check. It was like a temporary raise, but if they had kept on taking it out, we wouldn’t have missed it. Maybe congress wouldn’t go along with no cap. After all, that would be more money out of their pocket. They keep giving themselves raises but we don’t get COLA anymore.

  • What about the Nanny Tax Threshold ($1,700) which has also been static for the past 3 years. Is an increase expect there as well and if so by how much

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