Social Security Maximum Taxable Earnings Updated…Again
Due to potential tax changes currently being considered in Congress, the IRS has indicated that guidance for the 2018 tax year, which includes the payroll tax tables, will be issued later than normal. Since both the House and Senate bills contain changes to income tax rates, personal exemptions and the standard deduction, which may be effective in 2018, it is anticipated that the withholding tables and Form W-4 will require extensive revisions.
Currently, the final bill is being negotiated in conference committee to reconcile the different tax reform bills passed by the House and the Senate. That final negotiated bill would have to be passed by both houses and signed into law by the President.
When and if a bill is signed into law, employers will continue to use 2017 withholding tables until the new 2018 tables are released. Even if the rates are effective January 1, 2018, the IRS will need time to incorporate changes required by the new law. The IRS acknowledged that payroll professionals will need time to program and test the updates, as well. Of course, Corporate Payroll Services will continue to monitor the changes and keep you updated as guidance is provided.
Social Security Earnings Limit Changes
The maximum earnings subject to the Social Security tax will increase to $128,400 in 2018 from $127,200 in 2017. The original increased amount was $128,700, but it was recalculated when the Social Security Administration received additional salary data after the deadline which was not included in the original calculation. The $1200 or 0.95 percent increase is based on the government’s estimate of inflation-adjusted wage growth. Employers may want to notify affected employees of the increase.
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