Social Security Tax Would Increase by 2 Percent
A temporary reduction in Social Security payroll taxes is due to expire at the end of the year and hardly anyone in Washington is pushing to extend it. The expiration of this payroll tax reduction will cost a typical worker about $1,000 a year, and two-earner family with six-figure incomes as much as $4,500.
If legislation is not approved to extend the Social Security tax cut, the rate for employees would revert to 6.2 percent from 4.2 percent. The Social Security tax rate for employees had been 6.2 percent from 1990 to 2010.
The employer portion of the Social Security tax, which was 6.2 percent in 2011 and 2012, would not change. Because the employee and employer Social Security tax rates would again be the same, employers would need to make system adjustments to account for the change in the employee rate.
The increased Social Security tax rate is likely to be implemented in conjunction with an increased Social Security taxable wage base for 2013, from $110,100 in 2012. The 2013 Social Security wage base could rise to $114,900, according to Social Security Administration actuarial estimates.