The Social Security Administration (SSA) announced on Wednesday, October 17, 2007, that the 2008 social security wage base will be $102,000, an increase of $4,500 from the 2007 wage base of $97,500. As in prior years, there is no limit to the wages subject to the Medicare tax; therefore, all covered wages are still subject to the 1.45 percent tax.
The FICA tax rate, which is the combined social security tax rate of 6.2 percent and the Medicare tax rate of 1.45 percent, remains at 7.65 percent for 2008. The maximum social security tax employees and employers will each pay in 2008 is $6,324.00. This is an increase of $279.00 from the 2007 maximum of $6,045.00.
The social security wage base for self-employed individuals in 2008 will also be $102,000. There is no limit on covered self-employment income that will be subject to the Medicare tax. The self-employment tax rate remains 15.3 percent (combined social security tax rate of 12.4 percent and Medicare tax rate of 2.9 percent). In 2008, the maximum social security tax for a self-employed individual will be $12,648.00. This is an increase of $558.00 from the 2007 maximum of $12,090.00.
FICA coverage threshold increases for domestic, election workers
The threshold for coverage under social security and Medicare for domestic employees will be $1,600 in 2008, up from $1,500 in 2007; the coverage threshold for election workers will be $1,400 in 2008, up from $1,300 in 2007.