The US Social Security Administration has set the maximum amount of annual earnings subject to Social Security tax at $192,300 for 2027, an increase of $7,800 from the 2026 threshold. The adjustment affects employees, employers and self-employed workers, with implications for take-home pay, payroll expenses and annual tax planning as wage levels and the cost of retirement programs continue to evolve.

The 2027 Social Security Tax Limit: What Changes?

The taxable earnings limit, commonly called the Social Security wage base, determines how much employment income is subject to the Social Security portion of US payroll taxes. In 2027, the threshold will increase to $192,300 from $184,500 in 2026, a rise of approximately 4.2%. Earnings above the limit will not be subject to the standard Social Security payroll tax.

For employees, the Social Security tax rate remains 6.2% of covered earnings, while employers pay a separate 6.2% contribution. An employee earning at least $192,300 will therefore contribute a maximum of $11,922.60 to Social Security in 2027. The employer will pay the same amount on that worker’s behalf. Compared with 2026, the maximum employee contribution will increase by $483.60, assuming the worker earns at least the applicable taxable maximum in both years.

How Self-Employed Workers and High Earners Are Affected

Self-employed individuals generally pay both the employee and employer portions of Social Security and Medicare taxes through self-employment tax. The Social Security component is 12.4% of covered earnings, up to the $192,300 limit. At that threshold, the maximum Social Security portion for a self-employed worker will be $23,845.20 in 2027, before accounting for any applicable deductions or other tax considerations.

The increase is particularly relevant for higher earners because a larger portion of their annual income will be subject to Social Security tax than in 2026. Workers earning below the threshold will generally pay Social Security tax on all their covered wages, while those above it will stop paying the standard Social Security portion once their earnings reach the annual limit. The actual effect on take-home pay will depend on salary, employment status and other taxes.

Social Security and Medicare Have Different Tax Rules

The Social Security earnings cap does not apply to Medicare hospital insurance taxes. Employees generally pay 1.45% in Medicare tax on all covered wages, and employers pay another 1.45%. Self-employed workers generally pay the combined 2.9% Medicare rate on applicable earnings, without a maximum earnings threshold.

Certain higher-income individuals also face an additional 0.9% Medicare tax on wages above statutory thresholds. For employees, this additional tax generally applies when wages exceed $200,000, although the threshold for married couples filing jointly is $250,000. These rules mean that reaching the Social Security wage base does not end a high earner’s payroll tax obligations.

Employers and workers should review payroll withholding and compensation projections ahead of January 2027, particularly when earnings approach the new threshold. The annual limit can change with wage growth, while any broader changes to Social Security financing would require separate policy action. For now, the $192,300 cap provides a clear benchmark for estimating next year’s Social Security payroll taxes.