The Social Security Administration has announced the Social Security tax wage base for 2025 will be $176,100, an increase of $ 7,500 (nearly 4.5%) from the $168,600 figure used in 2024.
The $176,100 amount marks the limit of wages and self-employment income subject to Social Security taxes, also known as OASDI (old age, survivors, and disability insurance) tax. This amount is taxed at a 6.2% rate, making the maximum amount an employee and employer will pay $ 10,918.
The Medicare/hospital insurance tax, which has no wage limit, will remain at its current rate of 1.45% each for employees and employers.
High-earning employees will pay 2.35% Medicare tax (the regular 1.45% Medicare tax plus 0.9% additional tax) on all wages above $200,000. (This amount changes to $250,000 for joint returns and $125,000 for married taxpayers filing separate returns).
For self-employed people, who are responsible for both employer and employee taxes, the following rates will apply in 2025:
- 12.4% Social Security tax on the first $ 176,100 of self-employment income, for a maximum tax of $ 21,836 (12.4% x $176,100), plus …
- 2.90% Medicare tax on the first $200,000 of self-employment income ($250,000 of combined self-employment income on a joint return, $125,000 on a return of a married individual filing separately), plus …
- 3.8% (2.90% regular Medicare tax plus 0.9% additional Medicare tax) on all self-employment income more than $200,000.
Cost of Living Increases
The Social Security Administration also announced a 2.5% % cost-of-living adjustment (COLA) for more than 66 million beneficiaries beginning in January 2025. The same increase will apply to Supplemental Security Income (SSI) benefits.
Employees With More Than One Employer
If an employee has a second job, each employer must withhold Social Security taxes from the individual’s wages. This applies even if the combined withholding exceeds the maximum amount that can be imposed for the year.
An employee cannot ask an employer to stop withholding Social Security tax if they reach the wage base threshold but will receive a tax credit for any excess withholdings.
To Learn More
Do you have questions about payroll tax filing or payments? Contact us, and we will help you meet your compliance obligations.
