Glossary
Wage base
An annual earnings ceiling above which a particular payroll tax stops applying.
The Social Security wage base is the amount of wages subject to the 6.2% tax each year; earnings above it are not taxed for Social Security, though Medicare continues with no cap. State unemployment tax has its own, usually much lower, taxable wage base per employee, which varies enormously between states. Federal unemployment tax applies only to the first $7,000 of each employee's wages. Because bases are annual, someone changing jobs mid-year can have the same wages taxed twice by different employers and reconcile it on their return.