Contribution & Benefit Base
Year of Coverage
Latest amount & definition
The "old-law" contribution and benefit base for 2017 is $94,500.
This is the base that would have been effective without the enactment of the
1977 amendments to the Social Security Act. The present-law
contribution and benefit base is substantially higher
than the old-law base.
Purpose of the old-law base
The old-law contribution and benefit base is used by:
- the Railroad Retirement program to determine certain tax liabilities
and tier II benefits payable under that program to supplement the tier I
payments which correspond to basic Social Security benefits,
- the Pension Benefit Guaranty Corporation to determine the maximum amount
of pension guaranteed under the Employee Retirement Income Security Act,
- Social Security to determine a year of coverage in
computing the special minimum benefit,
- Social Security to determine a year of coverage (acquired whenever earnings
equal or exceed 25 percent of the old-law base for this purpose only) in
computing benefits for persons who are also eligible to receive pensions
based on non-covered employment.
Determination of the old-law contribution and benefit base for 2017
The formula for determining the old-law contribution and benefit base is
set by law. The formula is applicable only if a
cost-of-living increase becomes effective for
December of the year in which a determination of the base would ordinarily be made.
Because there is a cost-of-living increase for December 2016, the formula is
applicable. According to the formula, the old-law contribution and benefit base
for 2017 is determined to be the 1994 old-law base ($45,000) multiplied by the
ratio of the national average wage index for 2015 to
that for 1992, or, if larger, the 2016 old-law base ($88,200). If
the amount so determined is not a multiple of $300, it is rounded to the
nearest multiple of $300.
|1994 old-law base||$45,000|
|1992 average wage index||22,935.42|
|2015 average wage index||48,098.63|
|Computation||$45,000 times 48,098.63 divided by
22,935.42 equals $94,370.99, which rounds to $94,500|
|Higher amount||$94,500 exceeds the 2016
old-law base, so the old-law base for 2017 is $94,500