On November 27, the Social Security Administration increased the social security wage base from $127,200 in 2017 to $128,700 for 2018. We’ve assembled the following list to provide an overview of all the updates and changes that will go into effect next year.
- The employee and employer tax rates remain at 6.2 percent for Social Security (FICA) withholding. As in prior years, there is no limit to the wages subject to Medicare tax; therefore, all covered wages are still subject to the 1.45 percent tax.
- Covered Medicare wages in excess of $200,000 will be subject to an additional 0.90 percent Medicare tax that will only be withheld from employees’ wages. Employers do not pay the Additional Medicare Tax.
- The wage threshold for FUTA and SUTA employer taxes resets for wages paid on or after January 1. The FUTA wage limit remains at $7,000 in 2018. SUTA wage limits vary by state.
- The contribution limit for employees who participate in 401(k), 403(b) and most 457 plans has increased to $18,500 for 2018 (an increase of $500 from the 2017 limit of $18,000). The catch-up contribution limits to these types of plans for employees aged 50 and over remains at $6,000.
Compliance regulations may seem daunting, but implementation doesn’t have to be difficult. Let the expert professionals at Adams Keegan update and maintain compliance standards for you next year. To get started on a free consultation, contact an Adams Keegan specialist today.