Social Security Announces Largest FICA Wage Base Increase
On October 18, the Social Security Administration announced that the FICA wage base will increase from $118,500 in 2016 to $127,200 in 2017 – an increase of $8,700, which is the largest in the history of FICA withholding.
On January 1, payroll departments and payroll companies must begin using the new base to calculate FICA withholdings and gross-ups. There was no wage base increase between 2015 and 2016.
The 2017 increase is based on a rise in average wages. However, while wages increased in 2015, the 2016 wage base did not because the law provides that it cannot change in years when Social Security recipients do not receive a Cost of Living Adjustment (COLA). Subsequently, 2017’s large increase reflects growth in average earnings over a two year period.
To view the official announcement, click here.