In October, the Social Security Administration announced several important Social Security updates for 2017. The updates impact both people collecting Social Security benefits as well as those currently paying Social Security and Medicare taxes. These updates take effect January 1st, 2017. Below are a few of the key updates.
- Cost-of-Living Adjustment – The Cost-of-Living Adjustment for 2017 is 0.3%. Due to this adjustment, Social Security and Supplemental Security Income beneficiaries will receive a 0.3% increase to the benefits in 2017. This will amount to an average increase of $5 a month in benefits. There was no Cost-of-Living Adjustment in 2016.
- Wage Base – The wage base subject to the Social Security tax will rise to $127,200 in 2017, up from $118,500 in 2016. Wages above $127,200 are not subject to Social Security tax. There is still no wage base for the Medicare tax, meaning that all wages are subject to it.
- Tax Rates – There was no update to the Social Security and Medicare tax rates for 2017. The rates will continue to be 6.2% for Social Security and 1.45% for Medicare. There is also still the 0.9% Additional Medicare Tax for higher income taxpayers.
- Retirement Earnings Test Exempt Amounts – Individuals who continue to work while receiving Social Security benefits can now earn $16,920 per year, up from $15,720 in 2016, before their benefits begin to be reduced. Once their wages exceed this amount, their benefits will be reduced by $1 for every $2 earned.
There were also updates to the Social Security disability threshold, maximum Social Security benefits, and Supplemental Security Income payment, limits, and exclusions. Please contact us if you have any questions related to this recent update or would like to discuss how it impacts your specific situation.
Written by Mitch Green