As I learned last year, you only pay so much Social Security Tax in a year.
This year’s maximum taxable earnings for Social Security taxes is $110,100 [1]. The rate employees pay is 4.2% [1], so:
$110,100 * 4.2% = $4,624.20 is the maximum you will pay this year.
I got pretty close to the maximum with my September paycheck, so under $100 of my October paycheck will go to this tax! And then my November and December paychecks won’t pay any at all and my last bonus for the year won’t pay any either :)
I’ve told some of my friends about this maximum and they were pleasantly surprised to figure out that their paychecks would get a little bit bigger near the end of the year, especially those with bonuses coming in near the end of the year.
We don’t know for sure what percentage of our pay will go to Social Security tax next year (4.2% or 6.2%), but we do know the maximum taxable earnings for Social Security is going to be $113,700 [1]. This means that the maximum we will each pay is between $4,775.40 and $7,049.40.
I’m really excited to have an extra little bit to throw at the mortgage over the next few months. Readers, how about you?
[1] http://www.ssa.gov/planners/maxtax.htm
