New tax limits?
Of all the social security changes, we are finally talking about taxes. This is something many people want to get more info about, and we are here to deliver. In 2025, the maximum income subject to Social Security taxes will rise to $176,100, up $7,500 from the 2024 limit of $168,600. This is a huge change that was made to reflect the adjustments for inflation, and experts expect it to rise again next year in 2026.
The wage cap works in a simple way. Every year, Social Security taxes are taken out of your paycheck up to a certain income limit. In case you earn more than $176,100 in 2025, you will not need to pay Social Security taxes on any income above that amount.
This means that if you have an annual income of $200,000, Social Security taxes will only apply to the first $176,100 you earn. Despite all of this, Medicare taxes will still apply to all your earnings, as there’s no income limit for those taxes.
Social Security changes are such a big thing because, for example, this wage cap we were talking about affects how benefits are calculated. Because Social Security benefits are dependent on how much you earn up to the taxable limit, increasing them means that higher-income taxpayers will contribute more and may receive larger benefits in retirement.
