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What is the 2011 maximum social security withholding amount?

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11/30/2011

Maximum taxable earnings amount in 2011.

Updated 11/12/2010 07:59 PM | Answer ID 1905

Will the maximum taxable earnings amount change in 2011?

No. Because there is no cost-of-living adjustment, the Social Security Act prohibits an increase in the contribution and benefit base (Social Security's maximum taxable earnings), which normally increases with changes in the national average wage index. The maximum amount of earnings subject to the Social Security tax (taxable maximum) will remain $106,800.

As of the law passed on 12/17/2010 for 2011

The above is basically correct but can be confusing. The tax is payable on the first $106,800 of earnings. Earning are defined slightly differently for this than what is used for withholding, (or other things). Additionally, a portion of what was a total of 15.3% tax (half employer paid, half employee), is dedicated to Medicaid and has no maximum earnings.

However:

Under current law, employees pay a 6.2% Social Security tax on all wages earned up to $106,800 (in 2011) and self-employed individuals pay 12.4% Social Security self-employment taxes on all their self-employment income up to the same threshold.

For 2011, the Senate passed 2010 Tax Reform Act gives a two-percentage-point payroll/self-employment tax holiday for employees and self-employeds. As a result, employees will pay only 4.2% Social Security tax on wages and self-employment individuals will pay only 10.4% Social Security self-employment taxes on self-employment income up to the threshold.

The maximum savings for 2011 will be $2,136 (2% of $106,800).