Question

The Social Security Administration increased the taxable wage base from $106,800 to $110,100. The 6.2% tax rate is unchanged. Joe Burns earned over $120,000 each of the past two years.
a.

What is the percent increase in the base?(Round your answer to the nearest hundredth percent.)

Percent increase

%

b.

What is Joe’s increase in Social Security tax for the new year?(Round your answerto the nearest cent.)

Increase in social security tax

$

Answer 1

Answer:

The Social Security Administration increased the taxable wage base from $106,800 to $110,100.

A:

The percent increase in the base =

$\frac{110100-106800}{106800}\times100=3.09$%

B:

Previous year tax = $0.062\times106800=6621.60$ dollars

This year tax = $0.062\times110100=6826.20$ dollars

Increase in tax = $6826.20-6621.60=204.60$ dollars

Hence, Joe’s increase in Social Security tax for the new year is $204.60.