Social Security wage base remains at $106,800 for 2010

The Social Security Administration has announced that the wage base for computing the Social Security tax (OASDI) in 2010 remains unchanged at $106,800.

With consumer prices down over the past year, monthly Social Security and Supplemental Security Income benefits for more than 57 million Americans will not automatically increase in 2010. This will be the first year without an automatic Cost-of-Living Adjustment (COLA) since they went into effect in '75. Since there is no COLA, the statute prohibits an increase in the maximum amount of earnings subject to the Social Security tax as well as the retirement earnings test exempt amounts.

The FICA tax rate for employees and employers is 7.65% each—6.2% for Social Security and 1.45% for Medicare tax. For self-employed workers, the FICA tax is 15.3%—12.4% for Social Security and 2.9% for Medicare. There is a maximum amount of compensation subject to the Social Security tax, but no maximum for Medicare.

On a salary of $106,800 (or more), an employee and his employer each will pay $6,621.60 in Social Security tax in 2010, the same as in 2009.

A self-employed person with at least $106,800 in net self-employment earnings will pay $13,243.20 for the Social Security part of the self-employment tax in 2010, the same as in 2009.

The FICA tax rates have remained unchanged since '90.