Workers Earning Over $184,500 Stop Paying Social Security Taxes Mid-Year. Here’s How It Works
High earners quietly stop paying one of your biggest payroll taxes partway through the year, and the reason why has everything to do with a rule that Congress is now under pressure to eliminate.
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If you work, you’re probably well aware that you don’t get to keep your salary in full. Rather, the amount of money you get each pay period hinges largely on how much tax you have to withhold.
Not only do you have to pay federal and state tax on your earnings (assuming you live or work in a state with an income tax), but you have to pay FICA tax, which funds Social Security and Medicare.
If you earn an average salary, you’ll have taxes taken out of your pay to fund Social Security all year long. But higher earners often finish paying their Social Security taxes in the middle of the year. Here’s why.
Not all wages are subject to Social Security taxes
Workers pay into Social Security at a rate of 12.4%. That tax burden is split evenly among employers and employees, though those who are self-employed have to cover the entire 12.4%.
But there’s a limit as to how much earnings are taxed each year to fund Social Security. That limit changes yearly, but in 2026, it’s $184,500. This means that earnings beyond that point are exempt from Social Security taxes only (not federal or state taxes as applicable).
Because this wage cap exists, people who earn considerably more than $184,500 often finish paying their Social Security taxes mid-year. Some people can even finish paying those taxes during the first few months of the year if their earnings are high enough.
Some lawmakers want to change the system
If you’re thinking it’s not fair that you have to pay Social Security taxes on your entire salary while higher earners don’t, you’re not alone. Some lawmakers are pushing heavily to have Social Security’s wage cap eliminated. There’s a reason for that, though.
Social Security is facing a major funding crisis in the coming years. If Congress doesn’t act, Social Security might have to implement a broad 22% benefit cut. A cut of that size could push countless seniors into poverty, not to mention upend the retirement plans of many working folks today. So lawmakers are pretty desperate to avoid that scenario.
One way to pump more money into Social Security is to get rid of the wage cap and force higher earners to pay into the system on all of their earnings. If that change gets implemented, workers earning high wages would no longer stop paying Social Security taxes mid-year.
However, you should know that Social Security has a maximum monthly benefit that’s tied to the wage cap. So while earnings beyond that cap aren’t taxed for Social Security purposes, they also don’t count toward future benefits.
In other words, higher earners may get a tax break due to the wage cap. But they’re also limited in what they can collect from Social Security once they retire.
This doesn’t mean some lawmakers won’t continue to push for changes to the wage cap, especially in light of Social Security’s fiscal challenges. But it’s important to recognize that higher earners aren’t just being thrown a bone. They’re also being told they can only collect so much Social Security later.
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Maurie Backman has more than a decade of experience writing about financial topics, including retirement, investing, Social Security, and real estate. Her work has appeared on sites that include The Motley Fool, USA Today, U.S. News & World Report, The Washington Post, and Kiplinger.
Prior to becoming a full-time financial writer, Maurie worked in the financial industry trading distressed debt. She then changed course and spent a few years designing electronic toys. After a stint in content marketing and UX, she shifted back into writing and has since covered everything from the housing market to estate planning to Medicare.
When she's not busy writing, Maurie can be found hiking, walking her dogs, driving her kids to their various sports practices and games, and curling up with a good book. She cooks on occasion and bakes way too often.
