Dr. Friday explains how the Social Security wage base keeps rising and can increase payroll taxes for many workers. She also notes that Medicare tax stays uncapped, so higher earners should plan for it.
Transcript
G’day, I’m Dr. Friday, president of Dr. Friday’s Tax and Financial Firm. To get more info, go to www.drfriday.com. This is a one-minute moment.
Social Security wage base continues to rise due to the national average wage income inflation, increasing the amount we have to pay. So as employees, we pay 6.2% in Social Security tax. As employers, we pay 6.2% in Social Security tax.
Higher wage earners will eventually threshold out. It’s around $200,000 this year. And then after that, you’ll still continue to pay your Medicare, but it will continue to go up.
The remaining Medicare tax will stay uncapped, which means you will always be paying your Medicare tax. Again, something you should be working and planning on. If you’re in the higher income, you may be able to maximize some other taxes. If you need help, give me a call.
You can catch the Dr. Friday Call-in Show live every Saturday afternoon from 2 to 3 p.m. right here on 99.7 WTN.