The Social Security Administration has announced the new wage base for application of Social Security tax withholding, effective January 1, 2002. The taxable wage base will increase 5.6% from $80,400 to $84,900.
This increase will have the effect of raising the amount of Social Security tax paid by individuals making at least the maximum in Social Security taxable wages by $279, bringing the total tax to $5,263.80.
Self-employed taxpayers will see an increase of $558 in Social Security taxes, bringing the maximum Social Security tax to $10,527.60.
Meanwhile, Social Security benefits will increase by 2.6%, and the average Social Security recipient will receive $874 per month.