CHAPTER 4Social Security Tax Limit
If one is self-employed, then one must pay both sides of the tax rate, or a total of 15.30% to the government. That social security tax limit has been in place since 1990, when it was increased from 7.51% in 1989 (or 15.02% if self-employed).
We mentioned above that the rate increased in 1990. The Annual Maximum Taxable Earnings increase also from $48,000 in 1989 to $51,300 in 1990. So you were taxed at a higher rate on a greater earnings amount in 1990. And of course, the Annual Maximum Taxable Earnings has only gone up since then. Matter of fact, the Annual Maximum Taxable Earnings HAS GONE UP EVERY YEAR SINCE 1971. It increased by 4.7% from 2008 to an amount of $106,800 in 2009. The following table shows that, although the social security tax limit has not changed, by increasing the Annual Maximum Taxable Earnings over the last 10 years from 2000 - 2009, the government has received $138,756 from the employer and employee. Had the Annual Maximum Taxable Earnings not increase since 200, they would have collected $116,586. So they have collected an incremental $22,170 from us, just due to the increases in the Annual Maximum Taxable Earnings over this time period, without having to increase the social security tax rate.
Even though it has not changed since 1990, keep an eye on the social security tax limit. You can expect that to change too at some point. DOWNLOAD FREE E-BOOK Receive your free “ Social Security Adm. - What is It and How Does It Work?” e-book - a complete Social Security Administration guide. This informative guide, complete with 9 chapters, are clearly presented. Remember, you only need to download the free e-book once. All of the sections in this e-book on “ Social Security Adm. - What is It and How Does It Work?” are included in a single pdf file for your convenience. TO RECEIVE THIS FREE E-BOOK: Subscribe to our FREE monthly e-zine (Newsletter). Instructions to quickly access all of our free e-books will immediately follow. _________________________________ Additional Social Security Adm. Chapters
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