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Lost in the Shuffle: The Payroll Tax Cap is Also Rising - newsnationnow.com
The overwhelming focus this week has been on the anxiously awaited 2027 Social Security cost-of-living (COLA) announcement. That’s to be expected, since seniors need to understand what they can anticipate as an increase in their benefit payments in January.
But Wednesday’s annual update also included a change that affects higher earners, and it’s one of the most frequently discussed items when it comes to commentary on the looming Social Security insolvency problem. Specifically, we’re talking about the increase in the contribution and benefit base used to determine how much of an employee’s earnings are subject to the payroll tax. It’s generally referred to as the “taxable maximum” or more simply the “tax cap.”
Whatever term you use, it will rise to $192,300 in 2027, up from $184,500 this year. Employees and employers each pay 6.2% up to that limit, but earnings above the cap aren’t subject to the tax.
It’s controversial part of the overall Social Security reform debate, and NewsNation Digital’s “Your Money” reporter Andrew Dorn explores it in a post yesterday on their website. Check it out here.
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