Higher taxes for high-income workers
While income taxes may be going down because of the new tax law, payroll taxes will not. The maximum wages subject to payroll or FICA taxes, which fund Social Security benefits, increase by $1,200 this year. Employers and employees each pay 7.65% of the first $128,400 of wages in 2018. That means high-income workers will pay an additional $91.80 in payroll taxes this year. All wages, including those above the $128,400 cap, are subject to the 1.45% portion of the payroll tax that funds Medicare. Plus, individuals with earned income above $200,000 and married couples with earned income topping $250,000 will pay an additional high-income surcharge of 0.9% in Medicare taxes in 2018.