- In 2025, workers pay Social Security payroll taxes up to a $176,100 cap.
- High earners with $1 million in gross annual wage income have already stopped paying into the program as of March 6.
Most workers can expect to see Social Security payroll taxes taken from their paychecks throughout the year.
But high earners with $1 million in gross annual wage income have already stopped paying into the program as of March 6, according to the Center for Economic and Policy Research.
In 2025, workers are subject to payroll taxes on up to $176,100 in earnings. Workers pay a 6.2% Social Security payroll tax rate, which is matched by their employers, for a total of 12.4%.
Once high earners hit that $176,100 cap, they no longer contribute to the program for the rest of the year.
“Elon Musk has already reached that cap of $176,100 within the first few minutes of 2025 just on gross annual wage income,” said Emma Curchin, research assistant at the Center for Economic and Policy Research.
That does not include the investment income he earns, which is not subject to Social Security payroll taxes, she said.
Approximately 6% of workers have earnings over the taxable maximum, according to the Social Security Administration.
Ultimately, higher earners who contribute to the program up to the highest taxable earnings each year for most of their careers stand to receive the maximum retirement benefit.
In 2025, the maximum Social Security benefit for a worker retiring at full retirement age is $4,018 per month.
Meanwhile, the average monthly benefit for retired workers is $1,976 per month in 2025.
Congress could mull eliminating payroll tax cap
As Social Security’s trust funds face a looming insolvency date, some proposals have suggested eliminating or lifting the cap on earnings subject to the Social Security payroll tax.
Last year, Social Security’s trustees projected the fund that the program relies on to pay retirement benefits may last until 2033. At that time, 79% of scheduled benefits will be payable.
To prevent those benefit shortfalls, Congress may consider a variety of tax increases or benefit cuts.
One recent survey found the most popular policy option would be to eliminate the payroll tax cap for earnings of more than $400,000, according to the National Academy of Social Insurance, AARP, the National Institute on Retirement Security and the U.S. Chamber of Commerce. The change would not provide additional benefits for higher earners who are affected.
The survey also found Americans would be open to higher taxes to ensure benefits either stay the same or increase.
“They’re willing to pay more, not to get extra benefits for themselves, but just to close the financing gap to prevent indiscriminate across the board benefit cuts,” Tyler Bond, research director for the National Institute on Retirement Security, previously told CNBC.com.
Another change survey respondents favored is reducing benefits for individuals with higher retirement incomes excluding Social Security. That would apply to individual retirees with $60,000 or more aside from Social Security per year and married couples with $120,000 or more per year.
“By scrapping the cap, the Social Security trust fund could be much more healthy and secure,” Curchin said.
But it’s not enough. To restore the program’s solvency, research has shown a combination of changes would be required.
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