The Social Security Salary Cap Is Increasing In 2025. Here's How Much.

In 2025, you'll pay a Social Security tax of 6.2% on the first $176,100 you earn – up from the previous cap of $168,600 in 2024. Each year, the Social Security Administration (SSA) looks at the National Average Wage Index from two years prior to set this threshold. In 2023, that index was $66,621.80, a 4.43% rise over 2022. To match those higher wages, the SSA raised the 2025 taxable cap by $7,500, bringing it to $176,100. Meanwhile, the Medicare tax remains unchanged — there is no income cap – meaning 1.45% is withheld from every dollar earned, no matter how high your income. On top of that, an extra 0.9% Medicare tax applies to all earnings over $200,000 for individuals, or $250,000 for couples filing jointly.

This rise in income cap reflects broader wage gains across the private sector post-pandemic. In 2023, employers increased salaries to retain workers and keep pace with rising prices, with the Bureau of Labor Statistics finding that wages climbed 4.3% for the 12-month period ending in December 2023, one of the largest increases since the early 2000s. This latest salary cap is just one of the many big Social Security changes in 2025.

Due to the latest threshold, the maximum amount a worker could pay in Social Security tax in 2025 is $10,918.20. This is based on the new wage cap of $176,100 and the standard 6.2% tax rate. Meanwhile, under the Self-Employment Contributions Act (SECA), self-employed workers must pay the full 12.4% Old-Age, Survivors, and Disability Insurance (OASID) tax on their net earnings, up to the same $176,100 cap as regular employees. This means paying up to $21,836.40 in Social Security taxes, not including the 2.9% tax rate for Medicare taxes.

Self-employed individuals also need to pay this tax amount through quarterly estimated payments throughout the year. For freelancers and gig workers who might have been just below the 2024 cap, this cap jump means they should budget about $930 more in Social Security taxes in 2025. That figure comes from applying the full 12.4% tax rate to the $7,500 increase in the wage base. Given the complexity of these taxes, you might consider consulting a financial advisor.

This higher wage cap can affect more than just your paycheck today as certain workers might also see a change in their future Social Security benefits. That's because the Social Security Administration calculates your monthly retirement payout using an average indexed monthly earnings (AIME) formula, which can also help you calculate the average monthly SSA benefit amount. This means every extra dollar you earn in 2025, up to the new $176,100 limit, can increase that long-term benefit calculation. Since the wage cap went up by 4.43%, workers who already earned more than the maximum income rate will have more of their income counted toward their future Social Security checks.

The higher wage cap ultimately brings in more money from high earners, which helps support the long-term solvency of the overall Social Security program. According to the program's 2025 Trustees Report, this extra revenue is important because the fund is currently expected to run short by 2033.