Social Security’s taxable maximum will be $168,600 until December 31, 2024. After that date, the new taxable maximum for 2025 will increase considerably. Therefore, some high-earners whose jobs pay taxes to Social Security may have to pay more in taxes.
Bear in mind that the taxable maximum is the annual income limit up to which payroll taxes are applied. As a result, earnings over this threshold will not be subject to taxes in 2025.
Which will be Social Security’s taxable maximum in 2025?
From January 1, 2025, all workers will have to take into account that the new taxable maximum will be $176,100. If your earnings are higher than that, you will only pay taxes on your earnings up to that limit, $176,100.
The COLA increase will be about 2.5% for all Social Security recipients. However, the boost that the taxable maximum has seen is much higher, 4.45%. High earners will need to count on this extra money they will spend on taxes in 2025.
Here is the evolution of the taxable maximum in the last decade:
2015: 118,500
2016: 118,500
2017: 127,200
2018: 128,400
2019: 132,900
2020: 137,700
2021: 142,800
2022: 147,000
2023: 160,200
2024: 168,600
2025: 176,100
Source: SSA
What is the maximum amount of money workers can pay to Social Security?
If you earn $168,600 in 2024, you will have to pay up to $10,453 in taxes to Social Security. Remember that 6.2 percent of wages (up to the taxable maximum of $168,600 in 2024) is what employers and employees each pay to SSA.
Those American workers who have earnings of $176,100, will have to pay up to $10,918 approximately. Therefore, it is an increase of about 465 dollars extra per year in 2025. No doubt it could be a great deal of money if you have a really tight budget despite being a high earner.
Do not forget that Social Security payments are funded by the workers who are currently paying taxes. So, those who are collecting retirement benefits are getting the money other workers pay in taxes.