In 2023, the Social Security Administration (SSA) wage base will increase from $147,000 to $160,200. This new limit means employers can stop withholding Social Security taxes from employees' paychecks once their wages reach the new threshold.
As an employer, this change is essential for you to be aware of as you plan your budgets and staffing for 2023 and beyond, as any wages paid over the threshold will not be subject to Social Security taxes.
What Is the SSA Wage Base?
The Social Security Wage Base, also known as the contribution and benefit base, is the maximum amount of earnings subject to the Social Security portion of payroll taxes. These taxes help fund Social Security benefits, including old-age, survivors and disability insurance (OASDI) benefits.
This cap changes each year based on inflation. Because of the record inflation rates in 2022, the taxable maximum jumped from 2022 to 2023, increasing from $147,000 to $160,200.