2025 Social Security Tax Limit

The maximum earnings amount subject to Social Security taxes is now $176,100

Reviewed by David Kindness
Fact checked by Vikki Velasquez

The federal government sets a limit on how much of your income is subject to the Social Security tax. For 2025, the Social Security tax limit is $176,100.

That means that the maximum amount of Social Security tax an employee will pay (through withholding from their paychecks) in 2025 is $10,918.20 (6.2% of $176,100).

While an employed person pays half of the total tax and their employer pays the other half, if you’re self-employed, you pay both the employee and employer rates of 6.2% each, or 12.4%.

Key Takeaways

• The Social Security tax is calculated as a percentage of gross earnings, up to a certain limit.
• Every year, the government sets a limit on the amount of your earnings that can be taxed for Social Security. That limit in 2025 is $176,100.
• Employed individuals pay Social Security taxes through payroll deductions while self-employed individuals are responsible for paying both the employee and employer portions on their own.
• The Social Security Administration increased the benefit amount paid to recipients by 2.5% for 2025.

How the Social Security Tax Works

The Social Security tax you pay while you work is used to fund benefits for existing beneficiaries. Ideally, once you become eligible, current workers will be paying into the program so that you can collect benefits. The longer you wait to claim benefits (up to age 70), the greater the benefit amount you will receive.

According to the Social Security Administration (SSA), in 2024, about 68 million people per month received Social Security benefits. The average benefit for retired individuals was about $1,927. Those benefits will increase in 2025 due to the cost-of-living adjustment (COLA). Benefits for retired individuals will rise to about $1,976 per month.

These payments are funded by the Social Security tax, which is also known as the Old Age, Survivors, and Disability Insurance (OASDI).

The tax has two parts:

1. The payroll tax mandated by the Federal Insurance Contributions Act (FICA) and the self-employment tax mandated by the Self-Employment Contributions Act (SECA)
2. The Medicare tax, or hospital insurance tax

Payroll taxes are based on an employee’s gross wages, salaries, and tips. These taxes are typically withheld by an employer and forwarded to the government on the employee’s behalf. Currently, the Social Security tax rate is 6.2% for the employer and 6.2% for the employee.

Medicare taxes are also split equally between the employer and the employee, with a total tax rate of 2.9%.

Self-Employment

If you are self-employed, you pay Social Security taxes as part of the quarterly estimated taxes you submit to the Internal Revenue Service (IRS).

In this case, since you are considered both the employee and the employer, you are responsible for paying the full 12.4%. However, the IRS allows self-employed individuals to deduct the employer portion of self-employment taxes from their taxable income.

Important

Keep in mind that the Social Security program is facing long-term financing shortfalls that could affect future benefits. Increasing the annual Social Security wage cap is one way to limit the shortfall, but it would not completely solve the problem.

Social Security Tax Limits

The government bases the annual Social Security tax limits (also known as the taxable maximum) on changes in the National Average Wage Index (NAWI), which tends to increase every year. The changes are intended to keep Social Security benefits on track with inflation.

Any income you earn beyond the wage cap amount is not subject to the 6.2% Social Security payroll tax. For example, an employee who earns $180,000 in 2025 will pay $10,918.20 in Social Security taxes ($176,100 x 6.2%). But any additional earnings will not be taxed ($180,000 – $176,100, or $3,900), since their income is over the $176,100 threshold.

Medicare

There is no wage base limit for the Medicare tax. You must pay the Medicare tax on your entire earnings. Individuals who earn more than $200,000 are also subject to a 0.9% additional Medicare tax.

Changes in Social Security Tax Limits

The Social Security tax rate rarely changes: employees have been paying 6.2% since 1990. However, unlike the tax rate, the Social Security tax limit is adjusted annually.

The federal government increased the Social Security tax limit 17 times between 2005 and 2025. The largest increase was in 2023 when it was raised almost 9% from $147,000 in 2022 to $160,200 in 2023. Working people had to pay Social Security taxes on an additional $13,200 of their income.

Cost-of-Living Adjustment

The cost-of-living adjustment (COLA) is an annual adjustment made to the Social Security benefit amount. It reflects the Department of Labor’s Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Congress implemented annual COLA adjustments starting in 1975 when inflation rates were extremely high.

The COLA is 2.5% for 2025. This means that Social Security recipients will see a slight increase in their monthly payments in 2025. Retired individuals will receive an average of $1,976 for their SSA benefits, and retired couples will receive, on average, $3,089, thanks to the COLA increase.

Important

The cost-of-living adjustment (COLA) of 8.7% for benefits in 2023 was the largest rise in approximately 40 years.

Retirement Earnings Test Exempt Amounts

Workers who receive benefits before they reach full retirement age (FRA) are subject to the retirement earnings test. If your income exceeds certain thresholds, then Social Security will withhold benefits until you reach FRA. Like the Social Security tax limit, these thresholds typically increase annually with the national wage index.

Importantly, the benefits withheld are returned to you once you reach normal retirement age by way of a permanent increase in your benefit amount.

There are two annual earnings test exemption amounts. The first applies to individuals younger than retirement age and the second applies to individuals who reach FRA during that year.

For younger recipients, Social Security withholds $1 for every $2 in excess of their exempt amount. Individuals who reach retirement age will have $1 withheld for every $3 in excess of their exempt amount.

In 2025, the earnings test exemption amounts are:

• $22,400 for individuals younger than the FRA
• $62,160 for those who reach their FRA

In other words, an individual who earns $23,400 (or $62,160) or less in 2025 may be eligible to receive full Social Security benefits.

Who Has to Pay Social Security Taxes?

Normally, working people have to pay Social Security taxes. As an employee in the United States, you and your employer split the amount owed. That is, your company will deduct the Social Security tax you owe from your payroll check, and pay the second 6.2% amount itself. If you are self-employed, you are responsible for remitting the total amount of Social Security taxes yourself (a 12.4% tax rate). Under both situations, most workers are required to contribute Social Security taxes up to IRS limits.

Under limited circumstances, some individuals may claim a qualifying religious exemption or a temporary student exemption. Foreign government employees and nonresident aliens may also not be required to pay Social Security taxes. Lastly, individuals who don’t make enough money may also end up not paying into the Social Security system.

What Is the Social Security Tax Rate in 2025?

For employed workers, the rate is 6.2% on earnings up to the maximum taxable amount. The Medicare tax rate is 1.45%. In total, the combined rate is 7.65% up to the maximum taxable amounts. The employer pays the same percentages (the other half). Self-employed workers pay both halves.

Why Do I Pay Social Security Tax?

Workers pay Social Security taxes to support government programs. Social Security benefit payments issued by the government to retirees are funded using Social Security tax payments from current workers. When current workers retire in the future, they will become eligible to claim these government benefits (that will be funded by those working at that time).

What Is the Maximum Social Security Tax for 2025?

In 2025, the maximum taxable amount that the Social Security tax rate can be applied to is $176,100.

Who Is Exempt From Paying Social Security Taxes?

Certain individuals may claim an exemption and not be required to pay Social Security taxes. Some religious groups that openly oppose Social Security benefits may claim a religious exemption. Non-resident aliens may be exempt, depending on their type of visa.

Students working at their university may be exempt. Lastly, workers for a foreign government may be exempt under certain circumstances. If you believe you may fall into one of these groups, consult a tax advisor.

The Bottom Line

Social Security is a significant benefit that helps millions of retirees, surviving spouses, and people with disabilities. The Social Security Administration adjusts benefits and taxable amounts each year to keep up with inflation. The maximum taxable earnings for Social Security in 2025 is $176,100.

However, the annual increases may not be sufficient to sustain the program in future years. What’s more, the benefit alone isn’t considered enough to be your sole means of financial support in retirement.

That’s why saving and investing as much as you can throughout your working years is crucial to your future financial well-being.