Have you checked your paycheck stub in 2013 yet? If you have, then you already noticed that FED OASDI/EE, which stands for Old-Age, Survivors, and Disability Insurance/Employee’s Earning, under your tax deduction section went up significantly. The reason being is that employee’s portion of Social Security increased from 4.2% in 2012 to 6.2% in 2013. At first, I thought, “Oh, it’s just 2% increase”. However, I quickly realized that this 2% increase is actually 47.2% increase compared to 2012. For example, if you were paying $80 in FED OASDI/EE in 2012 every week, in 2013 you are paying $118 ($38 more every week)!
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The maximum taxable income increased as well. In 2012, the maximum taxable income was $110,100. In 2013, this maximum taxable income increased by $3,600 to $113,700! This means that an individual who paid maximum of $4642.20 in 2012 will be paying maximum of $7,049.40, an increase of $2407.20! Sigh… However, As long as your annual income is less than $113,700, your contribution to FED OASDI/EE will not reach $7,049.40.
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By the way, don’t expect that your Social Security benefit will increase by paying this extra 2% in 2013. There is absolutely no change in the benefit.