ASS provides 2022 tax salary base, benefits COLA
The maximum amount of an individual’s taxable income in 2022 subject to Social Security tax will be $ 147,000, the Social Security Administration (SSA) said on Wednesday.
An increase of $ 142,800 for 2021, the base salary limit applies to earnings subject to tax, officially known as the Old Age, Survivors and Disability Insurance Tax (OASDI). Since the OASDI tax rate is 6.2%, an employee whose total salary from an employer is equal to or greater than the maximum in 2022 will pay $ 9,114 in tax, with the employer paying a equal amount.
The Medicare hospital insurance tax of 1.45% for employees and employers has no salary limit and is unchanged for 2022.
Individuals with earned income over $ 200,000 ($ 250,000 for married couples filing jointly and $ 125,000 for married taxpayers filing separately) pay additional hospital insurance tax under Sec. 3103 (b) (2) 0.9% of salary relative to employment (also unchanged).
The self-employed pay a self-employment tax equal to the combined OASDI and Medicare taxes for employees and employers, i.e. 15.3%, up to the OASDI salary base and 2.9 % Medicare taxes on net self-employment income above, with an offsetting tax deduction above the threshold of half the OASDI equivalent of self-employment tax.
The SSA also announced on Wednesday a cost of living adjustment (COLA) based on an increase in the consumer price index from the third quarter of 2021, applicable to Social Security benefits payable in 2022, of 5.9 %, against an increase in COLA. for 2021 by 1.3%.
The annual amount that retirees receiving Social Security benefits can earn in the year they reach full retirement age before their benefits are reduced (by $ 1 for every $ 3 of earnings over the limit) will be $ 51,960 for 2022, up from $ 50,520 in 2021.
Beneficiaries who have not reached full retirement age will be able to earn up to $ 19,560 in 2022 (an increase from $ 18,960 in 2021) before their benefits are reduced by $ 1 for every $ 2 of excess earnings.
The maximum Social Security benefit for a worker retiring at full retirement age will increase to $ 3,345 per month in 2022, from $ 3,148 per month in 2021.
– Paul Bonner ([email protected]) is a JofA senior editor.