Be aware of 2016 payroll rates!

The Social Security Administration announced the 2016 wage base for computing the amount of payroll tax will be $118,500, the same as 2015.

The wage base is the maximum amount of wages subject to the social security portion of the payroll tax you may know as “FICA.” The total FICA rate is composed of two parts and the rates for both remain the same for 2016. The social security tax portion is 6.2% of an employee’s wages on amounts up to $118,500. The basic Medicare portion is 1.45% of an employee’s wages, no matter the amount. Note that employers must also withhold an additional 0.9% Medicare tax on wages over $200,000.