October 23, 2015
The Social Security Administration announced earlier in the month that there would be no automatic cost of living adjustments for 2016. This is only the 3rd time since 1975 that there has been no cost of living adjustment for beneficiaries. Similarly, the SSA announced that the Social Security portion of the FICA tax will maintain its current tax rate of 6.2% on maximum earnings of $118,500. This means that the maximum amount of Social Security tax that employers and employees will have to pay is just over $7,300 each. If an individual is self-employed, the absolute most they would have to pay is $14,694 if their income is at or above the $118,500 threshold.
Please note that the Medicare portion of the FICA tax is 1.45% on all earnings. Further, individuals that earn over $200,000, $250,000 for married couples filing jointly, will pay an additional 0.9% in Medicare taxes. The above mentioned Medicare rates have held steady since 2013.
No Social Security tax rate increase is great news for high earning individuals, employers & employees alike. If you would like to read more on 2016 Social Security changes, please visit their website fact sheet at www.ssa.gov/news/press/ factsheets/colafacts2016.html.
As always, if you have any questions, please feel free to contact the office at 541.388.7888. Stay up to date with tax news, deadline information and more by following us on social media.
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Period of Limitations: