Contribution and Benefit Base Determination

Method for determining the base
The formula for determining the OASDI 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 2011, the formula is applicable. The formula states that the base for any year Y after 1994 is equal to the 1994 base of $60,600 multiplied by the ratio of the national average wage index for year (Y-2) to that for 1992, with the result rounded to the nearest multiple of $300. If the result is less than the current base, the base is not reduced.

Base for 2012
Under the above formula, the base for 2012 shall be the 1994 base of $60,600 multiplied by the ratio of the national average wage index for 2010 to that for 1992, or, if larger, the 2011 base of $106,800. If the amount so determined is not a multiple of $300, it is rounded to the nearest multiple of $300.