Taxable wage base
A taxable wage base is the annual max limit on the wages one payroll tax applies to, such as Social Security or state unemployment.
Every payroll taxPayroll tax. Payroll tax is the umbrella term for every tax an employer calculates, withholds, or owes because it paid wages.Click to open the term first counts its own subject wages under its own inclusion rules. Subject wages up to the limit are taxable wages, and the rest are excess wages. Wages above a max limit stay reportable even though the tax no longer applies to them. One paycheck can produce several taxable wage figures at once. Reaching a limit is measured per employer and per calendar year. An employee changing jobs midyear starts a fresh Social Security wage base with the new employer.
Which payroll taxes stop at an annual limit?
Additional Medicare TaxAdditional Medicare tax. Additional Medicare tax is a 0.9% employee-only Medicare tax you withhold on wages you pay an employee over $200,000 in a calendar year.Click to open the term works the other way. You start withholding its 0.9% (employee only, no employer matchEmployer match. An employer match is the plan contribution you add on account of an employee’s deferrals, usually a percentage of them up to a pay cap.Click to open the term) once you pay an employee more than $200,000 in a calendar year. Local wage taxes set their own rules, and a few county occupational taxes stop at an annual maximum. A state unemployment return typically shows total subject wages, then taxable wages, with the difference on its own line. These differences are why year-to-date totals diverge sharply between wage boxes by December.
| TAX | ANNUAL LIMIT |
|---|---|
| Social Security (6.2% employee share, matching employer share) | $184,500 (2026) |
| Federal unemployment tax | First $7,000 a year of each employee’s wages |
| State unemployment tax | Each program’s own figure, some at the federal floor, others several times higher |
| Medicare | None |
| Federal income tax withholding | None |
| State income tax | Generally none |
- Topic no. 751, Social Security and Medicare withholding rates
- U.S. Department of Labor, Unemployment Insurance Tax Topic
General information, not legal or tax advice. Apply current federal and state rules with qualified guidance.