According to a recent report from the Social Security Trust Fund’s Board of Trustees, the tax limit for Social Security is projected to go up to $174,900 in 2025. The official announcement is expected in October. If this estimate remains the same, you would pay in Social Security taxes a maximum of $10,844 (roughly $391 more than in 2024). Here’s what you need to know.
Consider working with a financial advisor as you assess your taxes and how that will affect how much you receive from the federal government.
What Is the Social Security Tax Limit?
As the name suggests, theSocial Security tax goes to the Social Security program. You aren’t required to paythis tax on any income beyond the Social Security wage base limit. Employees and employers are each required to pay a 6.2% tax on wages.
In 2025, the limit is estimated to go up to $174,900, which has consistently increased from $168,600 in 2024 and $160,200 in 2023. So, if the 2025 estimate from the Social Security Trust Fund’s Board of Trustees gets confirmed in October, you’ll pay no more than $10,844 ($174,900 x 6.2%) in Social Security taxes.
For 2024, the limit is $168,600. As a result, earners pay a maximum of $10,453 ($168,600 x 6.2%).
Employers must deduct this tax from paychecks and match it. This means that12.4% goes to the program for each employee.If you’re self-employed, you’ll pay the full 12.4%, though you can deduct half on your tax return.
Keep in mind that this income limit applies only to the Social Security or Old-Age, Survivors and Disability Insurance (OASDI) tax of 6.2%. The other payroll tax is a Medicare tax of 1.45%, and you’ll have to pay that for all income you earn. In fact, for income over $200,000 (or $250,000 for couples filing jointly), theMedicare tax rate rises to 2.35%.
What Is the Social Security Tax?
The OASDI taxis the amount of money taken from your earned income to pay for Social Security benefits. You give up a portion of your salary, and your employer has to pay a matching portion as well. Employees and their employers across the country pay to fund the benefit payments that retirees receive. The idea is that you contribute to Social Security benefits throughout your career. Then, once you retire, current workers will keep contributing to the fund while you receive benefits. That way, the system can sustain itself.
The OASDI tax and Medicare tax are housed under the Federal Insurance Contributions Act (FICA), which is why the FICA acronym may show up on your paycheck.
The Social Security tax is part of why your Social Security benefit is higher if you wait longer to retire. If you delay your retirement until you reach your full retirement age (FRA), then you will have been paying the tax for longer. (Furthermore, the later you start claiming benefits, the less time the system will have to pay you those benefits.) Working longer might also mean that your 35-year average income will be higher, which would also increase your benefit amount.
Bottom Line
Despite valid concerns about the potential depletion of the Social Security trust funds, the idea behind Social Security benefits is easy enough to understand. You pay into the system while you work, and it pays you back once you put down your briefcase for good. For most salaried employees, the tax you pay is 6.2%. However, that only applies to income you earn up to an estimated $174,900 in 2025 ($168,600 in 2024); income over the Social Security wage base limit won’t be subject to the tax. The Social Security Trust Fund’s Board of Trustees is expected to announce the official Social Security wage base limit in October.
Tips for Navigating Retirement
- If all of the age thresholds and eligibility requirements and conditions for your Social Security benefits have you feeling overwhelmed, you may be interested in using our Social Security calculator. You can fill in your information, and we’ll do the rest. We’ll let you know what you can expect in annual benefits once you retire.
- Social Security isn’t intended to be your sole source of retirement income – you should also have retirement savings. To make sure these savings are on pace to meet your income needs, consider working with a financial advisor who can develop a financial plan and help you invest. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
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