The Social Security Administration announced a whopping 5.9% boost to monthly Social Security and Supplemental Security Income (SSI) benefits for 2022. The increase is based on the rise in the Consumer Price Index over the past 12 months ending in September 2021.
For those contributing to Social Security through wages, the maximum income subject to Social Security tax increases 2.9% next year, to $147,000. Above this threshold, Social Security taxes are not withheld from your earnings.
2022 Social Security Benefits – Key Information
What it means for you
- Up to $147,000 in wages will be subject to Social Security taxes, an increase of $4,200 from 2021. This amounts to $9,114.00 in maximum annual employee Social Security payments. Any excess amounts paid due to having multiple employers can be returned to you via a credit on your tax return.
- For all retired workers receiving Social Security retirement benefits, the estimated average monthly benefit will be $1,657 per month in 2022, an average increase of $92 per month.
- SSI is the standard payment for people in need. To qualify for this payment, you must have little income and few resources ($2,000 if single, $3,000 if married).
- A full-time student who is blind or disabled can still receive SSI benefits as long as earned income does not exceed the monthly and annual student exclusion amounts listed above.
Social Security & Medicare Tax Rates
The above tax rates are a combination of 6.20% for Social Security and 1.45% for Medicare, for a total of 7.65%. In addition, a 0.9% Medicare wages surtax applies for single taxpayers with wages above $200,000 ($250,000 for joint filers), which is not reflected in these figures. Your employer also pays Social Security and Medicare taxes on your behalf, at the same rates. These figures are reflected in the self-employed tax rates, as self-employed individuals pay both halves of the tax.
Andrea L. Blackwelder, CFP®, ChFC, CDFA® and Joseph D. Clemens, CFP®, EA are the founders and partners of Wisdom Wealth Strategies. Their shared passion is simple: to bring financial empowerment, understanding, and peace-of mind to people who wish to improve their financial future, build wealth for their families, and achieve financial independence. Click here to find out more about how you can work with the Denver Financial Advisors at Wisdom Wealth Strategies.