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. Withholding

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

    Cash wages include any kind of compensation that comes in the ...
  6. Covered Earnings

    The total amount of an employee's pay that is eligible for use ...
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. Taxes

    Small Business Tax Obligations: Payroll Taxes

    Don't leave it up to your accountant - owners are ultimately responsible for fulfilling tax obligations.
  3. 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.
  4. Retirement

    When Do I Stop Paying Social Security Tax?

    Almost never, unless you belong to one of these special groups.
  5. Insights

    Will You See Higher Wages In 2015?

    It's been a few years into the economic recovery from the Great Recession, and the employment picture has been rocky.
  6. Personal Finance

    How Minimum Wage Impacts Unemployment

    We explain how the minimum wage affects unemployment, public assistance, and the economy overall.
  7. Taxes

    Have Household Help? Don't Get In Tax Trouble

    Hiring household workers can be a complicated process. Know what the government requires so you can prevent penalties and problems down the road.
  8. Insights

    Minimum Wages Can Raise Unemployment

    Learn why many economists feel that minimum wages, while intended to benefit low-wage workers, actually hurt them by increasing unemployment.
  9. Personal Finance

    Can A Family Survive On The U.S. Minimum Wage? (WMT, COST)

    As the political debate roars on, the numbers are clear: Even two full-timers at U.S. minimum wage can't keep a family of four above the poverty line.
  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. Trickle-Down Theory

    An economic idea which states that decreasing marginal and capital gains tax rates - especially for corporations, investors ...
  2. North American Free Trade Agreement - NAFTA

    A regulation implemented on Jan. 1, 1994, that eventually eliminated tariffs to encourage economic activity between the United ...
  3. Agency Theory

    A supposition that explains the relationship between principals and agents in business. Agency theory is concerned with resolving ...
  4. Treasury Bill - T-Bill

    A short-term debt obligation backed by the U.S. government with a maturity of less than one year. T-bills are sold in denominations ...
  5. Index

    A statistical measure of change in an economy or a securities market. In the case of financial markets, an index is a hypothetical ...
  6. Return on Market Value of Equity - ROME

    Return on market value of equity (ROME) is a comparative measure typically used by analysts to identify companies that generate ...
Trading Center