The right data proves key to staying compliant with payroll taxes. The wrong data can lead you down the path of non-compliance, which unfortunately can include fines and penalties. This is why it’s so important to stay compliant with payroll taxes.
This article has been updated with the latest payroll tax figures for 2025. We’ve also included a table to show how the Social Security taxable wage base limit has increased over time.
Social Security Taxable Wage Base Increases
| Year | Social Security Wage Base |
| 2025 | $176,100 |
| 2024 | $168,600 |
| 2023 | $160,200 |
| 2022 | $147,000 |
| 2021 | $142,800 |
| 2020 | $137,700 |
| 2019 | $132,900 |
| 2018 | $128,400 |
| 2017 | $127,200 |
| 2016 | $118,500 |
| 2015 | $118,500 |
| 2014 | $117,000 |
Both employees and employers must pay social security tax and split the total amount due for each employee. In 2025, the social security tax withholding rate remains unchanged at 6.2% for both employees and employers. For those self-employed, the rate is 12.4% because they have no employer to split the tax with.
However, the Old Age, Survivors, and Disability Insurance (OASDI) program sets a limit on how much of an employee’s income can be taxed each year. This limit changes annually and is based on the average wage index.
The Social Security Wage Base is the maximum gross earnings subject to Social Security tax that can be imposed on an employee.
What is the Social Security Limit?
The Social Security limit is $176,100 for 2025, meaning any income you make over that amount will not be subject to Social Security tax. Given these factors, the maximum amount an employee and employer would have to pay is $10,918.20 each ($21,836.40 for self-employed).
What is the Medicare Tax Limit?
There is no wage limit for Medicare tax, which is currently 1.45% (same as 2024) and applied to all covered wages paid. Both employees and employers have to pay this rate—the self-employed owe all 2.9% (same as 2024).
If you’re considered a highly compensated employee, your income is subject to an additional 0.9% Medicare tax (same as 2024). Employers do not have to pay this additional tax. The added tax is applied in these circumstances:
- Married filing jointly and earn wages more than $250,000/year
- Married filing separately and earn wages more than $125,000
- Single and earn wages more than $200,000
- Head of household (with qualifying person) and earn more than $200,000
- Qualifying widow(er) with dependent child earning more than $200,000
What is the FICA Tax?
Short for Federal Insurance Contributions Act, FICA is a combination of the Social Security tax and Medicare tax. On a pay stub, it may appear as FICA (OASDI). For 2025, the total amount of FICA tax withheld totals 15.3%, again with most employees paying half, splitting the amount with their employer (unless you have self-employment income, then you have to pay the entire 15.3%).
Social Security Changes for 2025
People turning 62 in 2025 will have to be 62 for an entire month to claim full retirement benefits.
The full retirement age is increasing gradually if you were born from 1955 to 1960, until it gets up to 67. In 2025, the full retirement age will be 66 years and 10 months. Of course, you can always claim benefits beginning at age 62, but your lifetime benefits will be reduced by about 30%.
Beginning in January 2025, nearly 68 million recipients will see their Social Security benefits increase by 2.5% for a cost of living adjustment (COLA). The bump will compensate for the inflation rate and amount to about $50 per month for the average recipient.
The average monthly Social Security payout for 2025 is $1,967 while the maximum monthly benefit for a worker retiring at full retirement age increased by $196, which is $4,018 in 2025, up from $3,822 in 2024.
If you are below the normal retirement age and still work while collecting Social Security, your earnings limit increases for 2025. Prior to reaching full retirement age, you can earn $23,400 before deductions are made from your Social Security payments. After that amount, $1 will be deducted from your Social Security payment for every $2 over that limit. If you reach full retirement age in 2025, you can earn $62,160 (for 2025) before your payments are dinged. For every $3 you earn over that amount, your Social Security payment will be reduced by $1. Once you reach full retirement age, no benefits will be withheld if you decide to keep working. After age 70, there’s no real benefit to delaying retirement—unless you just want to keep working—because your monthly benefit stops increasing.
If you’re one of the 10 million Americans who qualify for Social Security disability payments, you’ll also see an increase in January 2025. For those designated as legally blind, payments will increase to $2,700 a month. For the non-blind, monthly benefits increased to $1,620 a month.
How is COLA Calculated?
The Social Security cost of living adjustment (COLA) is based on the difference in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of the previous year to the third quarter of the current year. Specifically, the Social Security Administration compares the average CPI-W index from July, August, and September of the current year to the average from the same three months of the previous year. If there is no increase in the CPI-W, there will be no cost-of-living adjustment.
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