2016 Social Security Wage Base
For 2016, the Social Security Wage Base is $118,500 (Wage base limit) and 6.2% (Employee social security tax rate).
Effective 2016-01-01Source: Publication 15 (2016), (Circular E), Employer's Tax Guide (IRS)Verified 2026-08-29
Who it applies to
Employees who pay social security tax on wages earned in 2016.
What changed this year, and why
For 2016, the social security wage base limit is $118,500. This is the maximum amount of wages subject to the employee social security tax. The employee social security tax rate is 6.2%. Wages above $118,500 are not subject to social security tax.
Common questions
- What is the social security wage base limit for 2016?
- For 2016, the wage base limit is $118,500. This is the maximum amount of wages subject to social security tax for the year.
Only social security has a wage base
Under federal payroll tax rules, wages are subject to both social security and Medicare taxes regardless of the employee's age or whether they are already receiving social security benefits. However, only social security has a wage base limit. Medicare taxes apply to all covered wages with no upper cap. For 2016, the social security tax rate is 6.2% withheld from the employee and 6.2% paid by the employer, for a combined total of 12.4%. The 6.2% rate applies only to wages up to the wage base limit of $118,500. Once an employee's wages exceed $118,500 in the calendar year, no further social security tax is owed on the excess, but Medicare tax continues to apply. Employers must determine withholding by multiplying each payment by the employee tax rate; there are no withholding allowances for social security and Medicare taxes.
Social security and Medicare taxes have different rates and only the social security tax has a wage base limit. The wage base limit is the maximum wage subject to the tax for the year. Determine the amount of withholding for so- cial security and Medicare taxes by multiplying each pay- ment by the employee tax rate. There are no withholding allowances for social security and Medicare taxes. For 2016, the social security tax rate is 6.2% (amount withheld) each for the employer and employee (12.4% to- tal).
Publication 15 (2016), (Circular E), Employer's Tax Guide (IRS)
An acquisition does not restart the limit
When one business acquires another, the new owner may inherit certain payroll tax obligations and benefits. If corporate acquisitions meet certain requirements, wages paid by the predecessor are treated as if paid by the successor for purposes of applying the social security wage base. This means the acquiring employer can count wages that the previous employer already paid to employees who continue working for the new company when determining whether those employees have reached the $118,500 social security wage base limit for 2016. Without this rule, employees who changed employers due to an acquisition could end up paying social security tax on more than the wage base amount during the same calendar year. The successor employer should determine whether to file Schedule D (Form 941) to report discrepancies caused by acquisitions, statutory mergers, or consolidations, and should review the Instructions for Schedule D (Form 941) and Revenue Procedure 2004-53 for detailed guidance.
Successor employer. When corporate acquisitions meet certain requirements, wages paid by the predeces- sor are treated as if paid by the successor for purposes of applying the social security wage base and for applying the Additional Medicare Tax withholding threshold (that is, $200,000 in a calendar year).
Publication 15 (2016), (Circular E), Employer's Tax Guide (IRS)
When the employer pays the employee's share
When an employer pays the employee's share of social security and Medicare taxes instead of withholding those amounts from the employee's wages, those tax payments are generally treated as additional wages to the employee. This means the employer's payment of the employee's portion of taxes becomes subject to social security and Medicare taxes itself. For 2016, the employee social security tax rate is 6.2% and applies to wages up to the wage base limit of $118,500. When the employer pays the employee's share of these taxes, the amount paid must be included in the employee's wages for purposes of calculating both social security and Medicare taxes. This creates a circular calculation where the additional wages themselves generate more tax liability. Employers should carefully track these payments to ensure proper reporting on employment tax returns and to determine when employees reach the social security wage base limit.
For 2016, the social security tax rate is 6.2% (amount withheld) each for the employer and employee (12.4% to- tal). The social security wage base limit is $118,500.
Publication 15 (2016), (Circular E), Employer's Tax Guide (IRS)
Household employers
Household employees are individuals who perform domestic service work in a private home, local college club, or local fraternity or sorority chapter. Employers of household employees have specific obligations regarding employment taxes. For social security and Medicare tax purposes, wages paid to household employees are generally subject to these taxes when certain conditions are met. The employee social security tax rate of 6.2% applies to wages up to the social security wage base limit. For 2016, the wage base limit is $118,500. For federal unemployment tax purposes, employers are not required to deposit FUTA taxes for household employees unless they report their wages on Form 941, 943, or 944. If employment taxes for household employees were not reported on those forms, FUTA tax should be reported on Schedule H (Form 1040) instead. Employers must have an employer identification number to file Schedule H.
Household employees. If you didn't report employ- ment taxes for household employees on Forms 941, 943, or 944, report FUTA tax for these employees on Sched- ule H (Form 1040).
Publication 15 (2016), (Circular E), Employer's Tax Guide (IRS)
Who counts as an employee
When a business hires workers, understanding who qualifies as an employee is essential for proper tax withholding and reporting. The document discusses the concept of common law employees, which refers to individuals who meet certain criteria that establish an employer-employee relationship. Under common law rules, someone is considered an employee if the business has the right to control what work they do and how they do it, even if they have some freedom in the details of how they perform their tasks. This determination matters because employers must withhold income tax and the employee's share of social security and Medicare taxes from wages paid to employees. If someone working for a business is not a common law employee, different rules may apply. The document notes that certain workers who may not be common law employees can still be treated as employees by statute for social security, Medicare, and FUTA tax purposes under specific conditions.
Statutory employees. If someone who works for you isn't an employee under the common law rules discussed above, don't withhold federal income tax from his or her pay, unless backup withholding applies. Although the fol- lowing persons may not be common law employees, they are considered employees by statute for social security, Medicare, and FUTA tax purposes under certain condi- tions.
Publication 15 (2016), (Circular E), Employer's Tax Guide (IRS)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
Publication 15 (2016), (Circular E), Employer's Tax Guide (IRS)
- Wage base limit
For 2016, the social security tax rate is 6.2% (amount withheld) each for the employer and employee (12.4% to- tal). The social security wage base limit is $118,500.
- Employee social security tax rate
For 2016, the social security tax rate is 6.2% (amount withheld) each for the employer and employee (12.4% to- tal).