By Katherine Rodriguez | NJ.com
nj.com
(TNS)
If you are currently in the workforce, you’re probably wondering how much you’re paying into government programs such as Social Security and Medicare.
Every year, the Social Security Administration releases a taxable income limit, also known as the taxable wage base.
According to the agency, the taxable wage base for 2026 is $184,500.
This means that earnings above $184,500 are not subject to Social Security taxes.
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Here’s how the Social Security payroll tax works compared with other taxes and what some experts are saying about the taxable wage base cap.
How does the Social Security payroll tax work and how does it compare to other tax programs?
Social Security and Medicare payroll taxes fall under the Federal Insurance Contributions Act (FICA).
If you are an employee, you pay 6.2% of your wages toward Social Security, and your employer pays a matching 6.2%.
For Medicare tax, you and your employer each contribute 1.45%.
But unlike Social Security, Medicare taxes apply to all earnings, and there is no income cap, according to CNBC.
High earners also pay a 0.9% Medicare surcharge.
If you are a self-employed worker, you pay the full 12.4% rate for Social Security and 2.9% for Medicare, but you can deduct half of those taxes when filing your income taxes.
What are experts saying about Social Security’s taxable wage cap?
Some experts say that raising the taxable wage cap would fix some of Social Security’s solvency issues.
“If we had just raised the taxable maximum, got rid of the cap, just that one policy … that would have put us on 75-year solvency 15 years ago,” said Jason Fichtner, former deputy commissioner at the Social Security Administration and current executive director of the LIMRA Alliance for Lifetime Income, in a panel back in March, according to CNBC. “We’ve lost that one major option.”
Others say that increasing the taxable wage cap could cause problems for the upper middle class and not just the rich.
“While typical high-earners will receive a larger initial Social Security benefit than low-earners, their return as a share of the lifetime Social Security taxes will be lower,” said Jessica Riedl in a brief from The Manhattan Institute.
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