Social Security payroll tax limit increases for 2025. Here's how that may affect you.
In 2025, millions of retired Americans will see a 2.5% cost-of-living adjustment for benefit payments, according to the Social Security Administration.
In 2025, millions of retired Americans will see a 2.5% cost-of-living adjustment for benefit payments, according to the Social Security Administration. But a lesser-known tax change will also impact higher-income workers.
The Social Security Administration on Oct. 10 unveiled a higher threshold for earnings subject to Social Security payroll taxes, known as the “taxable maximum” or “wage base.”
The limit shifts annually based on the national average wage index.
The limit for 2025 will be $176,100, up about 4.4% from $168,600 in 2024. Earnings above those caps aren’t subject to Social Security taxes but still incur levies for Medicare.
The change means more payroll taxes withheld for certain workers, but “there’s very little you can do” to avoid it, said certified financial planner Sean Lovison, founder of Philadelphia-area Purpose Built Financial Services.
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