In 1998 that threshold for people age 65-69 is $14,500, above which $1 is withheld for each $3 in earnings. This exempt amount is scheduled to rise under a law enacted in 1996. The exempt amounts will be $15,500 in 1999, $17,000 in 2000, $25,000 in 2001 and $30,000 in 2002. After 2002, the exempt amount will rise with growth in the average wage.

A lower exempt amount applies to those under age 65 ($9,120 in 1998) and the withholding rate is $1 for $2 of earnings above that level.