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Brace for higher Social Security taxes

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The Social Security Administration has announced an increase in the Social Security tax wage base for next year (SSA Fact Sheet, 10/20/06). For 2007, the 6.20% Social Security tax (12.4% for self-employeds) will apply to the first $97,500 of wages (up from $94,200 in 2006). The 1.45% Medicare portion of the tax (2.9% for self-employeds) will continue to apply to all wages.

…but pocket bigger benefits.

On the plus side, Social Security benefits will increase by 3.3% in 2007. The increase will kick in for nearly 49 million Social Security beneficiaries with the checks arriving in January 2007.

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