Income Tax Service For Small Businesses - Social Security's Old-Age, Survivors, and Disability Insurance (OASDI) program limits the amount of earnings subject to taxation for a given year. The same annual limit also applies when those earnings are used in a benefit computation. This limit changes each year with changes in the national average wage index. We call this annual limit the contribution and benefit base. For earnings in 2014, this base is $117,000.
The OASDI tax rate for wages paid in 2014 is set by statute at 6.2 percent for employees and employers, each. Thus, an individual with wages equal to or larger than $117,000 would contribute $7,254.00 to the OASDI program in 2014, and his or her employer would contribute the same amount. The OASDI tax rate for self-employment income in 2014 is 12.4 percent.
For Medicare's Hospital Insurance (HI) program, the taxable maximum was the same as that for the OASDI program for 1966-1990. Separate HI taxable maximums of $125,000, $130,200, and $135,000 were applicable in 1991-93, respectively. After 1993, there has been no limitation on HI-taxable earnings. Tax rates under the HI program are 1.45 percent for employees and employers, each, and 2.90 percent for self-employed persons. We're here to help. For no obligation free consultation contact us today!
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