The Social Security cost-of-living (COLA) adjustment for 2013 is 1.7%. This means the monthly Social Security and Supplemental Security Income (SSI) will be increased 1.7% over their 2012 rate. The previous rate increase from 2011 to 2012 was 3.6%. The increase is based to keep Social Security and SSI benefits in line with national inflation.
It should also be noted that the maximum earnings subject to Social Security tax in 2013 is set at $113,700, up from $110,000 in 2012. There continues to be no maximum earnings subject to Medicare tax.
The tax rates for 2013 are:
- Employee:
- Social Security: 6.2% (up from 4.2% in 2012)
- Medicare: 1.45%
- Plus an additional .9% on earned income over $200,000 for single, head-of-household, and married filing separately taxpayers
- Plus an additional .9% on earned income over $250,000 for married filing joint taxpayers.
- Employer:
- Social Security: 6.2%
- Medicare: 1.45%
- Self-Employed:
- Social Security: 12.4%
- Medicare: 2.9%
- Plus an additional .9% on earned income over $200,000 for single, head-of-household, and married filing separately taxpayers
- Plus an additional .9% on earned income over $250,000 for married filing joint taxpayers.
The amount of maximum earnings before a reduction in Social Security benefits has also changed in 2013. The definition of Full Retirement Age (FRA) in 2013 is “age 66 for people born in 1943 through 1954″ The 2013 maximum earnings are:
- Under FRA:
- $15,120
- Deduct $1 from benefits for each $2 earned over $15,120
- Meeting FRA in 2013
- $40,080
- Deduct $1 from benefits for each $3 earned over $40,080 until the month the worker turns age 66
- There is no limit on earnings for workers who are “full” retirement age or older for the entire year.
The Social Security Administration website has more information.
