High earner asks:
I just noticed that for the last few months of 2014, there was no social security tax deducted from my salary, and then in January, it went back up to where it was before that. Does that make any sense???
then a follow-up:
I think I just figured it out. Do they deduct the standard percent each month of the calendar year until you reach the maximum based on the annual taxable limit of $117,000, and then they stop deducting?
We at grumpy rumblings thank high earner for answering hir own question. (Note: In 2015, the maximum amount of taxable earnings is $118,500.) When policy makers talk about eliminating the tax cap on Social Security, this is what they’re talking about.
We are pro- this tax cap elimination because it comes as a surprise to most people the first time they hit it! (And it’s a lot more progressive than cutting Social Security benefits for people who need them, though some cuts make sense given longer working lives.) In the mean time, though, we wish we earned more money so we could take advantage of it…