The Social Security tax limit is the maximum amount of your wages that the government taxes for Social Security in a given year
For 2024, the Social Security tax limit is $168,600. This means that if you earn more than $168,600 in wages during the year, you only pay Social Security tax on the first $168,600. Any income above that threshold is not subject to the 6.2% Social Security tax that employees pay (employers also pay 6.2% on your behalf, up to the same limit).
The limit changes every year because it is tied to the national average wage index. The Social Security Administration announces the new limit in October for the following year. This annual adjustment means the threshold you see this year will likely be different next year.
Self-employed workers pay both the employee and employer portions of Social Security tax — 12.4% total — but the same wage limit applies. Once your net self-employment income reaches $168,600 in 2024, you stop paying Social Security tax on additional earnings.
Key Takeaways
- The 2024 Social Security tax wage base is $168,600, meaning earnings above this amount are not taxed for Social Security.
- The limit increases each year based on changes in the national average wage, so you should check the current year's threshold on the Social Security Administration website.
- High earners pay the same 6.2% rate as everyone else, but only on wages up to the limit, making Social Security tax regressive for top earners.
- Self-employed workers pay 12.4% total on net self-employment income, but the same wage base limit applies to their earnings.
How the limit affects your paycheck
If you earn $150,000 in a year, you pay Social Security tax on all of it. If you earn $200,000, you pay Social Security tax only on the first $168,600 (in 2024), and the remaining $31,400 is not subject to the 6.2% Social Security tax. This means higher earners pay a smaller percentage of their total income toward Social Security.
For most workers, this limit does not matter because their annual wages fall below the threshold. But for doctors, lawyers, executives, and other high-income earners, the limit means they stop seeing Social Security tax withheld from their paychecks partway through the year. Once you hit the limit, your take-home pay increases because no more Social Security tax is deducted.
Why the limit exists and how it changes
Congress set the Social Security tax limit to keep the program's funding stable. The limit is designed so that a certain percentage of total wages in the economy are subject to the tax. Without an annual adjustment, inflation would gradually erode the tax base and reduce revenue to the Social Security trust fund.
The Social Security Administration calculates the new limit each year using data on average wages. If average wages rise 3%, the limit typically rises about 3% as well. The announcement comes in October, and the new limit takes effect January 1. For 2023, the limit was $160,200; for 2024, it rose to $168,600.
Medicare tax has no limit
While Social Security tax stops at the wage base limit, Medicare tax does not have a limit. You pay 1.45% Medicare tax on all your wages, no matter how much you earn. Self-employed workers pay 2.9% total on all net self-employment income.
High earners also pay an additional 0.9% Medicare tax on wages above $200,000 (single filers) or $250,000 (married filing jointly). This additional tax has no upper limit and applies to all income above those thresholds.
What happens if you work for multiple employers
If you work for two employers in the same year and your combined wages exceed the Social Security tax limit, you may overpay Social Security tax. Each employer withholds 6.2% on your wages up to $168,600 without knowing about your other job. You can claim a credit for the overpayment when you file your tax return.
For example, if you earn $100,000 from one job and $80,000 from another, your first employer withholds Social Security tax on all $100,000, and your second employer withholds it on all $80,000. You have paid Social Security tax on $180,000 total, but the limit is $168,600. When you file your return, you report the overpayment and receive a refund or credit for the excess.
Self-employed workers and the Social Security limit
If you are self-employed, you calculate your Social Security tax based on your net self-employment income (your business profit minus half of your self-employment tax). The same $168,600 limit applies in 2024. Once your net self-employment income reaches that amount, you stop paying the 12.4% self-employment tax on additional earnings.
You report self-employment income on Schedule C and calculate self-employment tax on Schedule SE. The Social Security Administration uses your reported net self-employment income to determine when you have reached the wage base limit for the year.
How to find the current year's limit
The Social Security Administration publishes the current year's wage base limit on its official website at ssa.gov. You can search for "wage base limit" or "contribution and benefit base" to find the current threshold. The announcement typically appears in October for the following year.
Your employer should also provide the current limit on your pay stub or in your employee handbook. If you are self-employed, you can find the limit on the IRS website or on the Social Security Administration site when you are preparing your taxes.
Frequently Asked Questions
Does the Social Security tax limit affect my benefits?
No. Your Social Security benefits are based on your highest 35 years of earnings, but the calculation uses a separate formula that also has a limit. Earning above the wage base limit does not increase your future benefits because benefits are capped at a maximum amount. High earners receive the same maximum benefit as others who earned above the limit throughout their careers.
What was the Social Security tax limit in previous years?
The limit has risen nearly every year. In 2023 it was $160,200, in 2022 it was $147,000, and in 2021 it was $142,800. You can find a complete history on the Social Security Administration website if you need to reference past years for tax records or self-employment calculations.
If I am retired and working part-time, does the limit still explore?
Yes. If you are receiving Social Security benefits and working, you still pay Social Security tax on your wages up to the annual limit. However, if you have not yet reached full retirement age, your benefits may be reduced if your earnings exceed a separate earnings test limit, which is different from the tax wage base limit.
Do state and local government employees have to follow the Social Security tax limit?
Most state and local government employees are not covered by Social Security at all and do not pay Social Security tax. Some are covered under different rules. If you work for a government agency, check with your payroll department about whether Social Security tax applies to your wages.
Can I reduce my taxable income to stay below the Social Security tax limit?
Contributions to a traditional 401(k) or similar retirement plan reduce your taxable income for federal income tax purposes, but they do not reduce your wages for Social Security tax calculation. Social Security tax is withheld on your gross wages before retirement plan contributions are deducted.