New 2024 Social Security, FICA and Medicare Tax Update

New for 2024: The Social Security wage cap will be increased from the 2023 limit of $160,200 to the new 2024 limit of $168,600. The Federal Insurance Contributions Act (FICA) tax on wages remains at 7.65% for both the employee and the employer. FICA tax has two components – Social Security taxes (also known as old age, survivors and disability insurance or OASDI) remain at 6.20% while Medicare tax (also known as hospital insurance or HI) has an additional 0.90%, increasing o 1.45%. This 0.90% tax applies to wages exceeding $250,000 for married taxpayers who file a joint return, $125,000 for married taxpayers who file separate returns and $200,000 for other taxpayers. It should be noted, the Medicare withholding amounts still remain without any income limits or caps.

Good news for all those receiving monthly Social Security payments: Starting January of 2024, benefits will increase by 3.20%. These changes reflect cost-of-living adjustments to account for inflation.

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