Some Workers Will Pay $11,922.60 in Social Security Tax in 2027. Will You Be One of Them?
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You may have heard that Social Security is at risk of going bankrupt, but it’s not. Right now, benefit cuts are the worst-case scenario, and they’re not even guaranteed to happen.
But the whole reason Social Security faces the possibility of benefit cuts is that the labor force is shrinking. The program gets the majority of its revenue from payroll taxes. But as older workers retire in droves and fewer replacement workers enter the labor force, Social Security is apt to be strained.
That doesn’t mean Social Security isn’t taking in its fair share of tax revenue today, though. The program’s wage cap is increasing in 2027, which means workers will have to pay into Social Security on more earnings than in 2026. In fact, some workers could owe almost $12,000 in Social Security taxes next year.
Who gets hit with higher Social Security taxes?
Social Security has a wage cap that’s set each year. It determines how much earnings are taxed to fund the program.
The 2026 wage cap is $184,500. But in 2027, it’s increasing to $192,300.
Meanwhile, the Social Security tax rate is 12.4%. When we apply that to an income of $192,300, it equals $23,845.20 in Social Security tax.
However, workers don’t have to pay the entire 12.4% Social Security tax on their own. They’re able to split it equally with their employers, which means people earning $192,300 or more in 2027 will owe $11,922.60 in Social Security taxes in total.
Now that said, some people are self-employed. And if you’re in that boat, it’s bad news in the context of Social Security taxes, because you have to foot the entire 12.4% tax bill on your own. If you earn $192,300 or more in 2027, you could be looking at a Social Security tax bill equal to $23,845.20. That’s something to plan for carefully, especially if your self-employment wages have recently increased and you’re not used to paying so much Social Security tax.
Some lawmakers want to get rid of Social Security’s wage cap
If you’re a moderate earner, an increase in Social Security’s wage cap may not affect you. You may not even realize there is a wage cap to begin with. But if you’re a higher earner, the increase in the Social Security wage cap that’s set to happen in 2027 might sting.
Making matters worse, some lawmakers are trying to eliminate Social Security’s wage cap to shore up the program’s finances and prevent benefit cuts. The Social Security wage cap is currently tied to the program’s maximum monthly benefit, and it’s unclear whether those in favor of raising the wage cap intend to raise benefits to follow.
Those opposed to raising Social Security’s wage cap argue it won’t fully close the program’s funding gap, so it’s not the most effective solution. But either way, if you’re a higher earner, you may want to pay attention to what’s happening in the world of Social Security legislation, especially given the program’s pending financial shortfall and the need on lawmakers’ part to prevent sweeping benefit cuts.
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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.
