The federal government of the United States has updated the Social Security tax limit for 2024. The annual income subject to Social Security tax has increased from $160,200 in 2023 to $168,600 in 2024. In 2022, approximately 70.6 million Americans received Social Security benefits, with an average monthly payment of $1,681. For 2024, this benefit has been adjusted to $1,907 per month due to cost-of-living adjustments.

Social Security Tax Limit Overview

Recipients of Social Security benefits, including those from Supplemental Security Income (SSI), Social Security Disability Insurance (SSDI), and Veterans Affairs (VA), are required to contribute a portion of their income to Social Security tax. This tax is based on their income and resources. The contribution limit for Social Security tax has been increased to $168,600 for 2024, up from $160,200 in 2023. This adjustment reflects a 5.2% increase due to rising living costs.

Reasons for the Increase

The cost of living has risen by 3.2% in 2024, impacting individuals, especially those with lower incomes who face challenges with basic expenses such as rent, food, and medical care. To accommodate these increased costs, the government has raised the Social Security tax limit to $168,600, ensuring continued support for beneficiaries.

Social Security Tax Limit in 2023

In 2023, the Social Security tax limit was $160,200, and the average monthly benefit was $1,681. With the cost of living adjustment (COLA) at 3.2% this year, the new tax limit for 2024 is $168,600, reflecting the need for additional funding to maintain adequate Social Security benefits.

FAQs

What is the maximum Social Security contribution for 2024?

The maximum contribution limit for 2024 is $168,600.

What are the new changes in the tax rate for 2024?

The Finance Bill 2024 proposes allowing taxpayers to choose between a 12.5% tax rate that remains unchanged with inflation or a 20% rate that adjusts with inflation for certain real estate transactions.

Source: https://sosamericapac.org/