DEFINITION of 'Taxable Wage Base'

Also known as the Social Security Wage Base, this base is the maximum amount of earned income upon which employees must pay Social Security taxes. Generally, the employee's gross wages will be equal to the taxable wage base. And typically an employee's employer will handle this calculation and withold the correct amount of taxes from each paycheck, but the employee is still responsible for reporting the tax.

BREAKING DOWN 'Taxable Wage Base'

In some instances, an employee will earn wages that can be classified as excess wages. These excess wages can be subtracted from gross income and so taxable wage base will be lower than gross income.

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