The Social Security Administration has announced an increase in
the Social Security taxable wage base in 2013 from $110,100 to
$113,700. The $3,600 increase is slightly more than the $3,300
increase from 2011 to 2012. The cap was just $106,800 from 2009 to
2011, as inflation ground to a halt during the economic
The wage cap is the maximum amount of compensation subject to
tax under the Federal Insurance Contributions Act (FICA) for old
age, survivors and disability insurance (OASDI) — typically
called Social Security tax. FICA imposes both Medicare tax and
Social Security tax on compensation received for services at
matching employer and employee rates (with self-employed taxpayers
effectively paying both shares on self-employment income). Although
the Social Security tax is capped, the Medicare portion of FICA tax
applies to total earnings, with no limit on the amount.
The Social Security tax rate is generally 6.2% for both
employers and employees, but under a special temporary provision it
is only 4.2% for individuals in 2012. The rate is scheduled to
revert to 6.2% in 2013 without legislative action. The maximum
total individual share of Social Security tax is capped at
$4,624.20 in 2012 but is scheduled to jump to $7,049.40 in 2013,
with a return to the 6.2% rate and the higher wage cap.
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Program Content: Continued efforts to reform state and local tax (SALT) regimes by state legislatures, courts, tax authorities and the Multistate Tax Commission are transforming the way businesses are reporting their income tax obligations to the states. Evidence of those changes includes the shift to market-based sourcing, mandatory unitary combined reporting and other provisions. Businesses are also trying to come up with approaches to handle indirect tax complexity in light of legislation and litigation challenging the Quill physical presence rule. In addition, the recent federal and state elections’ effect on the SALT landscape will come into focus.
On October 5th, 2016, the Internal Revenue Service and Treasury Department published final, temporary and reproposed regulations1 under Sections 707 and 752 of the Internal Revenue Code of 1986, as amended.
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