The SSA announced recently that the maximum amount of wages in 2018 subject to the 6.2% social security tax will be $128,700, up from $127,200. Using this new wage base, a taxpayer could pay a maximum of $7,979.40 in 2018 in social security taxes, up from $7,886.40 in 2017. There is no change to the fact that all wages (without limit) are subject to Medicare tax at 1.45%.

Those who receive social security benefits will also see an increase in the benefits in 2018. Beneficiaries will receive a 2% increase in benefits in 2018 (up from a 0.3% increase in benefits in 2017 and 0% increase in 2016). This translates to an increase of $27 per month for the average beneficiary.

Also changed is the amount that a worker who is below full retirement age can earn before they have their social security benefits reduced. The limit increases from $16,920 in 2017 to $17,040 in 2018. For earnings over that amount, $1 in benefits is withheld for every $2 earned.