2016 OASDI tax and earnings base remains the same

Social Security beneficiaries will not see an increase in their monthly checks in 2016. The amount of earnings subject to taxation under the Federal Insurance Contribution Act (FICA) and the Self-Employed Contributions Act (SECA), the “wage base,” is also remaining the same. The 2016 wage base will continue to be $118,500.

No change in tax rates

The employee/employer Social Security tax rate remains at 7.65% for 2016, including 6.2% for the Old Age, Survivors, and Disability Insurance (OASDI) portion and 1.45% for the hospital insurance portion. For the self-employed, the rate continues to be 15.3%. Note that self-employed persons calculate their net earnings as gross earnings reduced by 7.65%, and they deduct half of their Social Security taxes from their net earnings for federal income tax purposes. The maximum social security tax payable by each employee in 2016 remains $7,347.

Domestic employee and election worker coverage

For 2016, the domestic employee coverage threshold amount will increase to $2,000, and the coverage threshold amount for election officials and election workers will be $1,700.

Quarter of coverage

The amount of earnings required for a quarter of Social Security coverage in 2016 increases to $1,260, up from $1,220 in 2015. (SSA Press Release, October 15, 2015; Social Security Fact Sheet, October 15, 2015; http://www.socialsecurity.gov/OACT/COLA/CovThresh.html.)

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