INSIGHTS & IDEAS

Social Security earnings subject to Social Security tax increases to $106,800 from $102,000

The Social Security Administration has recently announced the COLA adjustments effective January 1, 2009.  As a result, the maximum Social Security taxes withheld from an employee’s wages will be $6,603 ($13,206 when combined with the employer’s portion).  This amount is in addition to the 1.45% withheld for Medicare taxes (2.9% when combined with the employer’s portion). 

This is an effective tax increase of $297 ($595 including the employers' portion) on anyone earning $106,800 or more.  So much for no new taxes!