Social Security Benefit Income and Wage Increase for 2023
The Social Security Administration has announced an increase in benefit income and the wage base used to calculate and assess Social Security tax (FICA) on wages and self-employment income.
Recipients of Social Security Benefit income should see an increase in their benefit payment by 8.7%, the cost-of-living adjustment (COLA) based on the increase in the Consumer Price Index from Q3 2021 through Q3 2022.
Also announced is the increase in the base wage amount subject to FICA taxes, from $147,000 (2022) to $160,200 for 2023. The maximum FICA tax paid by employers and employees will increase to $9,932.40 each ($160,200 x 6.2%).
A self-employed individual is both the employer and the employee; therefore, the maximum FICA tax would be $19,864.80 ($9,932.40 x 2).
Attached is the 2023 Social Security Changes Fact Sheet for your reference. If you have questions as to how this may affect your tax situation, please contact your tax advisor.