The annual wage limitation is the maximum amount of earnings credited as wages to an individual's earnings record for any calendar year. It is determined annually by a formula under section 230 of the Act.

Before 1991, the maximum wage bases for Social Security (old age, survivors and disability insurance) and Medicare (hospital insurance) were the same. P.L. 101-508 established a separate and higher wage base for Medicare beginning 1991. Beginning with wages paid after 1993, there is no wage base limit for Medicare (Revenue Reconciliation Act of 1993).

SSA credits wages when paid. The 1977 Amendments changed the crediting of wages from a calendar quarter basis to a calendar year basis beginning 1978. For State and local employers, the change was effective 1981.

Beginning with 1990 wages, certain deferred compensation (i.e., income-tax deferred contributions to certain retirement plans under Section 401(k) of the Internal Revenue Code) are included in computing average wages for various social security program purposes. Although deferred compensation was covered for social security purposes beginning in 1984, deferred compensation was not included in average wages for computing the contribution and benefit base until the legislative enactment of P.L. 101-239.

A worker may be credited with wages up to $3,000 received from each employer for employment in calendar years 1937-1939. The limitation applies to the year for which wages are paid, not the year in which wages are paid.

A worker may be credited with wages up to $3,000 for employment in calendar years 1940-1946. The limitation applies to the year for which wages are paid, not the year in which wages are paid.