What is the Social Security wage limit for the year?

The Social Security wage limit, commonly known as the Social Security taxable wage base, is the maximum amount of an employee's earnings that is subject to Social Security tax for a given year. In this case, the correct answer is 128,400, which reflects the applicable threshold for the year referenced. This limit is adjusted periodically based on changes in the national average wage index.

Each year, the Social Security Administration evaluates wage data and sets the wage limit to ensure that the system remains financially sustainable while providing adequate benefits to eligible individuals. The figures typically increase over time to account for inflation and changes in overall wage levels in the economy. Therefore, understanding the wage limit is crucial for both payroll professionals and employees, as it affects the calculation of Social Security taxes withheld from wages.

It's also essential to note that earnings above this wage limit are not subject to Social Security tax; however, all earnings are still subject to Medicare tax, without a cap. This differentiation is key in payroll processing and compliance with federal tax regulations.