A taxable wage base limit is the amount of wages that are subject to taxes in a given time period. Once an employee has hit the wage base limit for a tax, the employee and/or employer are no longer responsible for paying that specific tax in the current year.
These common payroll taxes have annual wage base limits per employee:
We'll stop applying a tax for an employee on payroll once the year-to-date wages hit the wage base limit.
At the start of the next year, we'll reset the year-to-date amount so that the tax is applied again until the annual wage base limit is met.
Example tax calculations
Go to our article about FICA taxes (Social Security and Medicare) for an example tax breakdown and calulcation of FICA and unemployment taxes.