Social Security Wage Base 2027: What It Is and the Current Tax Limit

The 2027 Social Security wage base, also called the Social Security tax limit, is currently set at $192,300. The Social Security Administration (SSA) sets a new limit each year, and this one takes effect January 1, 2027..

What Is the Social Security Wage Base?

The Social Security wage base is the ceiling on the yearly earnings that can be taxed for Social Security. SSA’s official name for it is the contribution and benefit base, though it also goes by the taxable maximum, the Social Security tax cap, and the OASDI tax limit.

Within FICA, it applies to the Old-Age, Survivors, and Disability Insurance (OASDI) portion. SSA indexes the base to national wage growth, announces the next year’s figure each October, and uses the same amount to cap the earnings credited toward an employee’s future benefits.

Source: Social Security Administration

How the Wage Base Works in Payroll

Social Security withholding and the matching employer tax stop once an employee’s year-to-date wages reach the wage base. For high earners, take-home pay rises later in the year, and the employer’s tax cost drops for the rest of the year.

Each employer applies the limit separately. An employee with two jobs can have Social Security tax withheld on more than the wage base in total, since neither employer accounts for the other’s wages.

Example: An employee earns $200,000 in 2027. Social Security tax applies to the first $192,300 only.

• Employee share: $192,300 × 6.2% = $11,922.60, the maximum Social Security tax for 2027
• Employer share: $11,922.60, matching the employee
• The remaining $7,700 isn’t subject to Social Security tax

Medicare works differently:

• The 1.45% Medicare tax applies to all wages, with no cap, for both the employer and the employee.
• Employers withhold an extra 0.9% Additional Medicare Tax on an employee’s wages above $200,000, with no employer match.

For the full breakdown, see this guide to calculating FICA tax.

What Employers Should Know

Employers should be aware of their responsibilities and potential penalties with accurately following the SSA wage base.

Remember to:

• Update payroll tax tables for January 1. Social Security tax follows the date wages are paid, so a late-December pay period paid in January 2027 falls under the new limit. This year-end payroll checklist covers other annual updates.
• Fix missed updates quickly. An outdated limit can disrupt withholding, which then requires corrections on Form 941-X and Form W-2c.
• Report capped wages. Social Security wages on Form 941 and in Box 3 of Form W-2 stop at the wage base. The employer’s guide to payroll taxes explains each form.
• Reconcile per employee. Compare each employee’s Social Security wages to the capped amount, not total gross pay, especially for employees who cross the limit midyear.
• Watch deposit and filing deadlines. Incorrect deposits or filings can lead to IRS penalties and interest. The IRS outlines failure-to-deposit penalties and how they’re calculated.

How Paychex Can Help

Annual limit changes land at one of the busiest times of the payroll year. Paychex Payroll Tax Services keeps tax rates and wage limits current, calculates employee withholding and employer taxes each pay period, and handles tax filings and deposits on a business’s behalf, so withholding for high earners stops at the right point every year.