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October 20th, 2005
The Social Security taxable wage base will increase 4.1 percent
in 2006, rising to $94,200 from its 2005 level of $90,000.
The
taxable wage base caps the amount of employee compensation subject
to the 6.2-percent Social Security tax rate imposed on both employers
and employees. In 2006, employers must withhold Social Security
taxes on each employee's first $94,200 of compensation. This means
that the employer and employee must pay $5,840.40 each. Compensation
above the $94,200 limit is not subject to Social Security taxes.
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