Social Security Wage Base for 2013

The Federal Insurance Contributions Act (FICA) tax is comprised of the Social Security Tax and the Medicare tax, employees and employers are each responsible for paying the FICA tax while the self-employed pay the entire tax themselves.

In 2013, the first $113,700 of wages or SE income (up from $110,100 in 2012) will be subject to the Social Security component of the tax. Once again, there will be no limit on the wages or SE income subject to the Medicare tax.

Assuming that the Social Security payroll tax cut in effect during 2011 and 2012 is not extended, employees and employers will each pay a FICA tax rate of 7.65% in 2013 (Social Security Tax rate of 6.2% plus the Medicare tax rate of 1.45%) while the self-employed will face a combined tax rate of 15.3%.

To add another layer of complexity, beginning in 2013, the employee portion of the Medicare tax increases from 1.45% to 2.35% on wages in excess of $200,000 ($250,000 for married couples filing jointly and $125,000 for married couples filing separately). The additional 0.9% Medicare tax is also imposed on SE income that exceeds these thresholds.