Fundamental Payroll Certification (FPC) 2025 – 400 Free Practice Questions to Pass the Exam

The maximum amount of wages subject to Social Security tax is updated annually, and for 2023, it is indeed $168,600. This figure represents the wage base limit, which is the maximum amount on which the Social Security tax can be applied. Earnings above this threshold are not subject to the tax, meaning that individuals will only pay Social Security tax on income up to this limit.

The significance of this wage base limit is that it helps to balance the funding of the Social Security program, which provides benefits to retirees, disabled individuals, and survivors of deceased workers. The limit is subject to change each year based on increases in the national average wage index, which reflects the overall growth in wages across the country.

Other options such as $118,500, $200,000, and $150,000 do not reflect the correct wage base limit for the year in question. The outdated figure of $118,500 was used in 2016, and numbers above this amount also do not align with the latest figures for the current year, which help maintain current and accurate payroll practices.