The Social Security Administration announced today that the Maximum Taxable Earnings or Social Security Wage Base would increase from $117,000 in 2014 to $118,500 in 2015.
Social Security Increases Based on CPI Change
Since there was a 1.7% increase in the Consumer Price Index (CPI-W) from the third quarter of 2013 to the third quarter of 2014, the Social Security Administration announced a 1.7% cost-of-living adjustment for 2014. This compares to a 1.5% increase in 2014. The wage base increase is based on an increase in the national average wage index. Wages are taxed at 6.2%, so the maximum tax to be paid by each employee at that rate would be $7,347.00. About 6% of workers who pay Social Security Tax are expected to reach the maximum in 2015.
Retirement Earnings Test Exempt Amounts Increase for 2015
For workers under full retirement age who are receiving Social Security benefits, $1 in benefits is withheld for every $2 above the Retirement Earnings Test Exempt Amount of $15,480 per year or $1,290 per month in 2014. This will increase to $15,720 per year or $1,310 per month for 2015. The year an individual reaches full retirement age, $1 in benefits is withheld for every $3 above the Retirement Earnings Test Exempt Amount of $41,400 per year or $3,450 per month in 2014. This will increase to $41,880 per year or $3,490 per month for 2015. The month an individual reaches full retirement age there is no limit on earnings.
Quarter of Coverage Amounts Increases to $1,160
Also increasing for 2015 is that amount needed to earn a Social Security credit, formerly known as a quarter of coverage. In 2014, a credit is earned for every $1,200 of earnings, up to a maximum of four credits. That amount will increase to $1,220 for 2015.
Social Security Monthly Benefits to Increase in January 2014
The maximum benefit for a worker retiring at full retirement age is also increasing from $2,642 to $2,663. See the table below for other changes in Social Security benefits for 2015.
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