2024 Taxable Wage Base Updates
- Nov 30, 2023
- 1 min read
Two major salary base adjustments are coming in January 2024 that you should be aware of!
SB 951 will take effect on January 1, eliminating the taxable wage cap on employee compensation subject to California's State Disability Insurance (SDI) withholding rate. SDI is a program that provides qualified workers with short-term Disability Insurance (DI) and Paid Family Leave (PFL) wage replacements if they need to take time away from work. The SDI withholding rate will rise to 1.1% in 2024, with no taxable wage ceiling and no maximum withholding for any employee entitled to SDI contributions.
In addition, the Social Security Administration announced in October that benefits for more than 71 million Americans receiving Social Security and Supplemental Security Income (SSI) will increase by 3.2% in 2024. As a result of this increase, the maximum amount of wages subject to Social Security tax (taxable maximum) will rise from $160,200 to $168,600. It is important to note that the Social Security Withholding Rate will remain unchanged. Individuals earning more than $200,000 ($250,000 for married couples filing jointly) will pay an additional .9% in Medicare taxes. Additional information regarding Medicare changes for 2024 are available at www.medicare.gov.
What is an employer to do? Consult with your payroll provider to ensure your withholding rates are adjusted.