Every October the Social Security Administration (SSA) announces any adjustments that will take effect, in the coming January, based on average wage increase. On October 13th, 2017 the SSA announced that the maximum amount of earnings subject to the Social Security tax was increasing from $127,000 of 2017, to $128,700 going into 2018.
However, the SSA has recently come forward explaining that they needed to correct the maximum earnings taxable to $128,400 for 2018. The change, they explain, is due to corrected W2s that were provided to Social Security, in late October of 2017, by a national payroll service provider.
While corrections from one payroll service provider may not initially seem like much, they actually account to approximately 500,000 corrections for W2s from 2016. These corrections resulted in three changes based on the national average wage:
The 2018 taxable maximum
Primary insurance amount bend points (figures used in the computation of Social Security benefits)
Family maximum bend points
Beyond the above changes, no other items were affected.
The change to the taxable maximum begins in January 2018; the updated bend points used in the calculations will only apply to those who became eligible for Social Security benefits in calendar year 2018, with no affect to current beneficiaries.
You can learn more about the Taxable Wage Base, directly from the SSA, by clicking HERE
Also feel free to fill out the form below if you'd like to talk to a tax professional here at Proliant who can explain more about how we can help interpret what these changes mean for your business.