Social Security Tax Limit for 2025: What the Higher Cap Means for Your Paycheck
Wealthier taxpayers will have more Social Security tax taken from their paychecks this year due to a wage base increase. How much more?


The Social Security tax, withheld from each paycheck, stops once your income reaches a certain amount. That is due to the Social Security tax limit or "wage base," which is the maximum amount of earnings subject to Social Security tax.
These taxes fund the Social Security program, which provides retirement, disability, and survivor benefits to eligible recipients.
Last fall, along with a 2.5% cost-of-living (COLA) increase, the Social Security Administration (SSA) announced a 4.4% increase in the tax limit for 2025, leading to higher taxes for some wealthy taxpayers this year.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.

Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
2025 Social Security tax limit increase
For 2025, the Social Security tax limit is $176,100. (Last year, the tax limit was $168,600.) So, if you earned more than $168,600 this past year, you didn’t have to pay the Social Security payroll tax on the amount that exceeds that limit.)
That can result in considerable tax savings for those who earn more than the wage base.
Let’s calculate the savings for someone whose salary exceeds the limit by $10,000 for 2025.
Salary: $176,100 + $10,000 = $186,100
Without the wage base limit, the tax would be about $11,538 (186,100 x 6.2%).
With the wage base limit, the tax would be about $10,918. (Tax on wage base: $176,100 x 6.2% = $10,918.20).
Savings calculation:
Savings = $11,538.20 (tax without limit) - $10,918.20 (tax with limit) = $620
So, an employee whose salary exceeds the Social Security tax limit by $10,000 would save $620 in Social Security taxes this year.
On the other hand, someone who earns wages exceeding the base by $30,000 would receive a $1,860 tax break. (The more you make over the tax limit, the more your Social Security tax savings.)
Note: This savings applies only to the Social Security portion of FICA taxes. The employee would still pay the 1.45% Medicare tax on their entire salary, as there is no wage base limit for Medicare taxes.
Also, for high-income earners, there's an additional Medicare tax of 0.9% on earnings above $200,000 for single filers or $250,000 for married couples filing jointly.
However, the Social Security tax limit increases yearly as the national average wage index increases. When that happens, almost every year, more income is subject to the Social Security tax.
How Social Security taxes are calculated and what the rates are
The tax rate for an employee's portion of the Social Security tax is 6.2%.
- Your employer also pays 6.2% on any taxable wages.
- Self-employed individuals pay the full 12.4%. However, it’s worth noting if you're self-employed, you can deduct the employer-equivalent portion of that amount.
Over the past five years or so, the Social Security tax limit has increased by an average of about $3,960 a year.
However, for 2025, the tax limit went from $168,600 to $176,100, an increase of $7,500 from the previous year. That is significantly less than the $13,200 increase from 2022 to 2023 — the largest recorded increase.
As a result, the maximum Social Security tax jumped from about $10,918 to $10,453.
So, people making over $176,100 in 2025 will pay about $465 more in Social Security taxes this year than they would have paid if the tax limit remained at $168,600.
COLA increase for Social Security
Along with the wage tax base rate, the SSA announced the 2025 Social Security COLA increase. As Kiplinger reported, more than 66 million retirees receiving Social Security checks will see their monthly government payments rise 2.5% this year.
On average, according to the SSA, Social Security retirement monthly benefits for about 68 million people are expected to grow by more than $50 beginning January 2025. When benefits grow, wealthier taxpayers might pay more tax. That's why a COLA rate increase is just one way you could get a surprise tax bill on your Social Security benefits.
Who is exempt from Social Security tax?
Some people don’t have to pay Social Security taxes. (Exemptions from Social Security taxes may be available if certain requirements are met.) Some examples are listed below, although other exemptions may be available.
- Certain members of religious groups or organizations
- Students and certain young (minor) workers
- Employees of foreign governments
- People the IRS considers to be “Non-resident aliens”
Looking ahead: The Social Security wage base forecast
Each year, the Board of Trustees for the Social Security Trust Fund publishes a report on the financial status of the Social Security program. The latest report provides tax limit projections through 2033.
Interestingly, the board initially projected that the 2025 tax limit would rise to $174,900. However, as Kiplinger reported, the official announcement of the 2025 limit put the number at $176,100.
The projected tax limit for 2026 is $181,800. Stay tuned to see if that holds.
Related
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

As the senior tax editor at Kiplinger.com, Kelley R. Taylor simplifies federal and state tax information, news, and developments to help empower readers. Kelley has over two decades of experience advising on and covering education, law, finance, and tax as a corporate attorney and business journalist.
-
Think Twice Before Getting a Credit Card Cash Advance
A credit card cash advance can be a quick solution when you need emergency help with money. But you'll pay for the convenience with high interest and fees.
-
What is AI Worth to the Economy?
The Letter Spending on AI is already boosting GDP, but will the massive outlays being poured into the technology deliver faster economic growth in the long run?
-
Will You Get a ‘Surprise’ Tax Bill on Your Social Security Benefits in Retirement?
Retirement Taxes Social Security benefit payments might land you in hot water when filing 2025 taxes — here are three reasons why.
-
Social Security 2025: The Outdated Tax Rules Costing Retirees Money
Retirement Taxes Could the Social Security 90th anniversary be a good time to revisit old tax thresholds?
-
Retirees Should Watch These Four Key Tax Changes in 2025
Tax Changes This year brings key tax changes that could affect your retirement taxes and income.
-
The Most Tax-Friendly State for Retirement in 2025: Here It Is
Retirement Tax How do you retire ‘tax-free’? This state doesn’t tax retirement income, has a low median property tax bill, and even offers savings on gas. Are you ready for a move?
-
Georgia Could Be Latest State to Eliminate Income Taxes
State Tax Eliminating the Georgia state income tax: Last-minute summer trend or permanent policy?
-
Five Ways Trump’s 2025 Tax Bill Could Boost Your Tax Refund (or Shrink It)
Tax Refunds The tax code is changing again, and if you’re filing for 2025, Trump’s ‘big beautiful’ bill could mean a bigger refund, a smaller one or something in between next year. Here are five ways the new law could impact your bottom line.
-
New SALT Deduction Could Put Thousands Back in California Homeowners’ Pockets
Tax Breaks The federal state and local sales tax (SALT) deduction cap is higher this year, and could translate into bigger savings for Golden State homeowners.
-
Key 2025 Tax Changes for Parents in Trump's Megabill
Tax Changes Are you a parent? The so-called ‘One Big Beautiful Bill’ (OBBB) impacts several key tax incentives that can affect your family this year and beyond.