The Social Security withholding “FICA” tax of 6.2 percent will apply to 2019 salary (plus any self-employment earnings) up to $132,900, up from $128,400.
For FERS employees, the tax cuts off at that figure but CSRS Offset employees continue paying it, with the money going into the federal retirement fund instead of the Social Security fund. Regular CSRS employees don’t pay Social Security taxes; they pay only into the federal retirement fund.
There is no limit on the 1.45 percent Medicare tax paid by all employees, a tax that sometimes is presented together with the FICA tax and labeled as the Social Security tax, even though only the FICA portion goes to Social Security.
For those drawing Social Security benefits, the earnings test applying to beneficiaries aged 62 through “full retirement age,” currently 66, will rise by $400 to $17,440. Those beneficiaries lose $1 in Social Security benefits for every $2 in earnings through employment (including self-employment) above the limit. A separate earnings test applies only to earnings for months in the year an individual reaches full retirement age but prior to the individual attaining that age. One dollar in benefits will be withheld for every $3 in earnings above $46,920, up from $45,360. There is no limit on earnings beginning the month an individual attains full retirement age.
And for purposes of determining the benefit offset under the windfall elimination provision—which can reduce Social Security benefits of CSRS retirees who worked long enough in each system to qualify for a benefit from each—the annual “substantial earnings” minimum will rise from $23,850 to $24,675.
More on Social Security and Federal Retirement at ask.FEDweek.com