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Earnings Subject to Social Security Tax to Remain Unchanged in 2011

Publication Date: 10/18/2010

The maximum amount of earnings subject to Social Security tax will remain at $106,800 in 2011—the same as 2010, the Social Security Administration announced Oct. 15 in a news release.

As a result, the maximum an employee will owe in 2011 to satisfy Social Security taxes going to the Old-Age, Survivors, and Disability Insurance (OASDI) program will remain $6,621.60. The last time the amount rose was 2008.

There is no limit on the amount of earnings subject to taxes that go to the Hospital Insurance (HI) program—Medicare.

SSA said there also will be no cost-of-living adjustment for Social Security benefits in 2011. There has been no increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of 2008, the last year a COLA was determined, SSA said.

The Social Security tax rates for employees and self-employed taxpayers are 6.2 percent and 12.4 percent, respectively.

A worker with wages equal to or larger than $106,800 would contribute $6,621.60 in 2011, and his or her employer would give the same amount. A self-employed individual would contribute $13,243.20.

Pelosi Plans Vote on Relief Bill

Meanwhile, in an attempt to offer some relief to Social Security recipients, House Speaker Nancy Pelosi (D-Calif.) announced late Oct. 14, in anticipation of SSA's announcement, that the House will vote on legislation (H.R. 5987) during the upcoming lame-duck session to provide 57 million older Americans, retired and disabled veterans, and disabled individuals a $250 one-time payment to compensate for the lack of a COLA.

The legislation, introduced by Ways and Means Social Security Subcommittee Chairman Earl Pomeroy (D-N.D.), “will be fiscally responsible and upholds our bedrock promise of economic security for our nation's seniors,” Pelosi said.

White House Press Secretary Robert Gibbs said Oct. 15 President Obama will renew his call for a $250 economic recovery payment that the same classes of people covered under the Pomeroy bill received in 2009 as part of the economic stimulus law (Pub. L. No. 111-5).

Gibbs said the White House is urging “members of Congress on both sides of the aisle to support our seniors, veterans, and others with disabilities who depend on these benefits.”

As of Oct. 15, H.R. 5987, the proposed Seniors Protection Act, has 127 Democratic co-sponsors and no Republican co-sponsors.

The complete text of this article can be found in the BNA Daily Tax Report, October 18, 2010. For comprehensive coverage of taxation, pension, budget, and accounting issues, sign up for a free trial or subscribe to the BNA Daily Tax Report today. Learn more »

© 2010, The Bureau of National Affairs, Inc.