2027 Payroll Taxes: Social Security Wage Base Rises to $192,300

Nov 5

Each fall, the Social Security Administration (SSA) announces the maximum amount of earnings subject to Social Security tax for the coming year. For 2027, that limit, known as the wage base or taxable maximum, increases to $192,300, up from $184,500 in 2026. If your business has employees, or if you are self-employed, this change affects your 2027 payroll budget and cash flow planning.

Here is what business owners should know before the new year.

What the Social Security wage base is

Social Security tax, also called OASDI tax (old-age, survivors and disability insurance), is charged at 6.2% for the employee and 6.2% for the employer, for a combined 12.4%. Unlike Medicare tax, Social Security tax stops once an employee’s wages for the year reach the wage base.

For 2027, the SSA confirms that an employee earning $192,300 or more will contribute $11,922.60 in Social Security tax, and the employer will contribute the same amount. In 2026, the maximum for each was $11,439.

In practical terms, for every employee who earns at or above the new limit, the employer’s maximum Social Security cost rises by $483.60 per person in 2027. Employees in that group will also see Social Security withholding continue later into the year than in 2026.

Medicare tax has no limit

Medicare hospital insurance tax remains 1.45% for the employee and 1.45% for the employer, and there is no wage cap. All covered wages are subject to it.

The 0.9% Additional Medicare Tax also continues. According to the IRS, an employer must begin withholding it in the pay period in which an employee’s wages from that employer exceed $200,000 for the calendar year, without regard to the employee’s filing status or wages from another job. There is no employer match for this additional tax. The employee’s actual liability depends on filing status: $250,000 for married filing jointly, $125,000 for married filing separately and $200,000 for other filers. Some employees may owe more than what was withheld and may need to adjust withholding or estimated payments.

What self-employed owners should know

Self-employed individuals pay both halves through self-employment tax: 12.4% for Social Security and 2.9% for Medicare. The IRS explains that the amount subject to self-employment tax is generally 92.35% of net earnings from self-employment, and the 12.4% Social Security portion applies only up to the wage base. For 2027, that means the Social Security part of self-employment tax applies to the first $192,300 of combined wages and self-employment earnings.

If you are an owner who receives both W-2 wages and self-employment income, the wage base is shared between them, which is worth reviewing when you plan quarterly estimated payments.

Employees with more than one employer

Each employer must withhold Social Security tax up to the wage base on the wages it pays, even if the employee also works elsewhere. When an employee with two or more employers has total wages above the limit, too much Social Security tax may be withheld. The IRS explains that the employee may be able to claim the excess as a credit on their individual income tax return. If a single employer withheld too much, the employer should correct it, and the employee generally cannot claim it as a credit.

Other 2027 Social Security figures

The SSA also announced a 3.6% cost-of-living adjustment for Social Security and SSI benefits beginning in January 2027. Beneficiaries younger than full retirement age for the entire year can earn up to $25,560 in 2027 before benefits are reduced; SSA withholds $1 in benefits for every $2 earned above that limit. Those reaching full retirement age in 2027 can earn up to $67,920 before that year’s reduction applies, with $1 withheld for every $3 earned above that limit, counting only earnings before the month they reach full retirement age. These limits can matter for business owners or employees who are collecting benefits while still working.

A short 2027 payroll checklist

Confirm your payroll provider or software has updated the Social Security wage base to $192,300 for wages paid in 2027.
Identify employees expected to earn more than $192,300 and estimate the higher employer Social Security cost.
Flag employees likely to cross $200,000 so Additional Medicare Tax withholding starts in the correct pay period.
If you are self-employed, update your 2027 estimated tax calculations for the new wage base.
Review compensation for owners who receive both wages and self-employment income.
Remind employees with more than one job to review their withholding and their year-end Forms W-2.

Payroll tax rules can interact with compensation planning, retirement contributions and estimated payments. A qualified tax professional can help you review how these 2027 figures apply to your situation.

Sources

This article is for general educational purposes and is not tax or legal advice for any specific situation.

Franklin Caraballo https://caraballocpa.com