Yesterday the Social Security Administration announced that the amount of wages subject to the Social Security tax will increase from $147,000 in 2022 to $160,200 in 2023. The 9.0% increase in the contribution base is the largest since 1983.

In Washington, paid family and medical leave (PFML) premiums are assessed on wages up to the Social Security cap. The increase in the taxable wage base will thus increase premiums paid into the program next year.

It is not clear what assumption about the Social Security cap Milliman made in its actuarial report on the program, which I wrote about here. However, it does appear that the Social Security contribution base increase is larger than what the Employment Security Department (ESD) had been expecting, as recently as last month. ESD’s presentation to the legislative task force on paid family and medical leave insurance premiums on Sept. 22 includes a comparison of growth in the Social Security base to Washington’s annual average wage (see page 22). It assumes that the Social Security base would grow by less than 6% in 2023.

ESD has not yet announced what the PFML premium rate will be next year, but it will almost certainly be higher than the current 0.6% rate. (For more on the program and its financial troubles, see our policy brief.)