Social Security Tax Changes

In an October 16, 2012 press release, the Social Security Administration (SSA) announced and increase in monthly Social Security and Supplemental Security (SSI) benefits. The 1.7 increase represents a cost-of-living adjustment (COLA) that will begin for Social Security beneficiaries in January 2013 and for SSI beneficiaries on December 31, 2013.

Additionally, the maximum amount of earnings subject to Social Security tax will increase from $110,100 (2012) to $113,700 (2013).

What the press release failed to mention is that unless there is last minute legislation, the Social Security tax will go back to the pre-2011 rate of 6.2%.  Congress originally authorized a decrease of this rate to 4.2% for the 2011 tax year.  However, the 4.2% rate was extended for 2012.  For now we will just have to wait and see.