What are Wage Limits for Payroll Tax?
An annual highest limit is set by the Social Security Administration on the portion of an employee’s wages that is required to pay the Social Security tax. This is referred to as the benefit and contribution foundation, and it varies each year. The utmost wage amount liable to be subject to Social Security tax in 2024 is $1,47,000. Since the Medicare tax has no maximum taxable amount, emplyer and the employee would continue to divide the 2.9% tax on earnings in excess of $1,47,000, despite the fact that those earnings would no longer be subject to Social Security tax. Annual adjustments are also made to the wage base that is subject to federal and state unemployment taxes. The limit on wages subject to FUTA and SUTA taxes is determined by the respective wage bases.
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