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.

RELATED TERMS
  1. Maximum Wage

    A maximum wage is a ceiling imposed on how much income a worker ...
  2. Wage Push Inflation

    A general increase in the cost of goods that is preceded by and ...
  3. Living Wage

    A theoretical wage level that allows the earner to afford adequate ...
  4. Wage Expense

    In financial accounting, wage expense represents payments made ...
  5. Withholding

    The portion of an employee's wages that is not included in his ...
  6. Cash Wages

    Cash wages include any kind of compensation that comes in the ...
Related Articles
  1. Trading

    Why Wages Stick When The Economy Shifts

    Even economists can't agree on the impact (or even existence) of wage stickiness. So, how does it affect you?
  2. Personal Finance

    Why Low-End Jobs Are Paying More

    More companies are now paying employees in low-end jobs higher wages. Here is why – and who benefits.
  3. Insights

    Wal-Mart's Wage Increase Has Potential Drawbacks for Workers (WMT)

    Wal-Mart workers were overjoyed to hear that they would receive $10 an hour. However, there are significant non-financial drawbacks to this raise.
  4. Insights

    These Retailers Are Least Impacted by Wage Increases (WMT, TGT)

    Learn how certain retailers, such as those that have already built wage increases into their business models, face less pressure from rising wages.
  5. Insights

    Good News: Long-Awaited Wage Growth is Finally Happening

    American wages reached record levels last year--and not just for the wealthy.
  6. Insights

    Why $15 Minimum Wage Might Not Be Good News for Anyone (MCD, DPZ)

    Discover why the minimum wage isn't the panacea it is made out to be, and how artificial wage increases strain businesses and consumers.
  7. Financial Advisor

    Life Insurance Plans to Help Your Small Business Retain Employees

    How to use and design cash value life insurance plans as an incentive to help attract and retain key employees.
  8. Personal Finance

    Minimum Wage: Good Cause Or Economic Pariah?

    Here are some positives and negatives to help you decide where you stand on the minimum wage debate.
  9. Retirement

    6 Benefits You're Required by Law to Offer Your Employees

    Learn about the benefits that a business must offer to employees, such as family and medical leave, as well as various forms of insurance coverage.
  10. Investing

    Why Walmart Raised Its Minimum Wage

    Read about the potential pros and cons of Walmart's promise to increase its minimum starting salary to $10 an hour.
RELATED FAQS
  1. How much of my income goes to Social Security taxes?

    Discover how much of your income goes to social security tax: what the rate is, what the limits are and what types of income ... Read Answer >>
  2. Why is there a cap on the Federal Insurance Contribution (FICA) tax?

    Find out the history behind the the controversial FICA cap on wages. Read Answer >>
Hot Definitions
  1. Price Elasticity Of Demand

    A measure of the relationship between a change in the quantity demanded of a particular good and a change in its price. Price ...
  2. Market Capitalization

    The total dollar market value of all of a company's outstanding shares. Market capitalization is calculated by multiplying ...
  3. Frexit

    Frexit – short for "French exit" – is a French spinoff of the term Brexit, which emerged when the United Kingdom voted to ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Down Round

    A round of financing where investors purchase stock from a company at a lower valuation than the valuation placed upon the ...
  6. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
Trading Center