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Higher Social Security taxes for many in 2017, small increase in benefits for recipients

From CCH tax news:

The Social Security Administration (SSA) has announced that Social Security and Supplemental Security Income (SSI) benefits will increase by 0.3 percent in 2017. The rates for Old-Age, Survivors and Disability Insurance (OASDI) and Medicare Hospital Insurance (HI) taxes will remain at a combined 7.65 percent in 2017. Because of the increase, the maximum taxable earning for OASDI purposes will increase from $118,500 to $127,200.

The SSA cost-of-living adjustments (COLAs) are based on the rise in the average Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of 2014 through the third quarter of 2016. Because of the increase in the CPI-W during that period, the law increases benefits to help offset inflation. As a result, monthly Social Security and SSI benefits for over 65-million Americans will increase 0.3 percent in 2017.

Comment. The Social Security wage base for 2017 will be $127,200. According to the SSA, of the estimated 173-million workers who will pay Social Security taxes in 2017, some 12 million will pay more because of the increase in the wage base. The SSA explained on its website that the formula for determining the wage base is set by law. The formula is applicable only if a cost-of-living increase becomes effective for December of the year in which a determination of the base would ordinarily be made. Because there is a cost-of-living increase for December 2016, the formula is applicable, the SSA explained.


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