Next year, in 2022, the federal government is encouraging retirement savings through increase Social Security payroll tax contributions. The good news will be an increase in Social Security earnings upon retirement. The bad news may be less net wages or dollars in your paycheck.
Seniors and other Americans receiving Social Security benefits in 2022 will see the largest increase in their payments in four decades, reflecting surging inflation during the pandemic.
Next year’s cost-of-living adjustment, or COLA, will be 5.9%, the Social Security Administration said Wednesday. The increase will translate to an addition of $92 to retirees’ average monthly benefit next year, bringing the amount to $1,657, the agency estimates.
Henceforth, the maximum amount of an individual’s taxable earnings in 2022 subject to Social Security tax will be $147,000, the Social Security Administration (SSA) announced this week.
An increase of $4,2000 from $142,800 for 2021, the wage base limit applies to earnings subject to the tax, known officially as the old age, survivors, and disability insurance (OASDI) tax.
The growth of the Social Security wage cap from $127,200 in 2017 to $147,000 in 2022 represents a more than 15.5 percent increase over the past five years.
By the start of the new year, U.S. employers will need to adjust their payroll systems to account for the higher taxable wage base under the Social Security payroll tax and notify affected employees that more of their pay will be subject to payroll withholding.