Payroll and self-employment tax
Social Security tax limit for 2027 and 2026
Social Security tax applies only up to a yearly earnings limit, the wage base. For 2027 it is $192,300, up from $184,500 in 2026, the Social Security Administration announced on October 14, 2026. Above it, no more Social Security tax is due for the year, but Medicare tax continues on every dollar.
The limit and the maximum tax
Employees pay 6.2% of wages up to the limit and their employer pays another 6.2%. Self-employed people pay both halves, 12.4%, on net earnings up to the same limit.
| Item | 2026 | 2027 |
|---|---|---|
| Social Security wage base (taxable maximum) | $184,500 | $192,300 |
| Maximum Social Security tax, employee (6.2%) | $11,439 | $11,922.60 |
| Maximum Social Security tax, employer (6.2%) | $11,439 | $11,922.60 |
| Maximum Social Security part of self-employment tax (12.4%) | $22,878 | $23,845.20 |
| Net self-employment profit at which the limit is reached (about) | $199,783 | $208,230 |
If you are self-employed
Self-employment tax is figured on 92.35% of net profit, so the 2027 limit is reached at about $208,230 of profit. If you also have a W-2 job, your wages count toward the same limit first, and only the rest of the limit is left for self-employment income.
S corporation owners pay Social Security tax on their salary, not on distributions. Each extra dollar of salary costs 12.4% between the company and the owner until the salary reaches $192,300, which is one reason the salary level matters in S-Corp planning.
Medicare has no limit
Medicare tax is 1.45% for the employee and 1.45% for the employer, or 2.9% for the self-employed, on all earnings with no cap.
The 0.9% Additional Medicare Tax applies to wages and self-employment income above $200,000 for a single filer, $250,000 on a joint return or $125,000 if married filing separately. These thresholds are set by law and do not rise with inflation.
If you had two employers
Each employer withholds 6.2% up to the limit on its own, so someone with two jobs can have more than the maximum withheld. The extra is claimed back as a credit on the federal return; you do not ask the employers for it.
The 2027 Social Security COLA
Benefits rise 3.6% for 2027. The increase starts with benefits payable in January 2027, and Supplemental Security Income payments rise from December 31, 2026. The Social Security Administration says retirement benefits will go up by about $75 a month on average.
People with a my Social Security account can see their COLA notice online from late November; others get it by mail in December.
Is an S-Corp worth it for you?
Self-employment tax is often the biggest line on a business owner’s return. Our tax planning assessment compares staying an LLC with an S-Corp salary on your own numbers. $195, in person in Naperville, IL, by phone or by Zoom.
Questions people ask
What is the Social Security tax limit for 2027?
$192,300 of earnings, up from $184,500 in 2026. Employees pay 6.2% up to that amount, at most $11,922.60 for the year.
What is the maximum self-employment tax for Social Security in 2027?
$23,845.20, which is 12.4% of $192,300. It is reached at about $208,230 of net profit. Medicare tax of 2.9% continues above that.
What was the Social Security wage base for 2026?
$184,500. The most an employee paid in Social Security tax for 2026 was $11,439.
What is the 2027 Social Security COLA?
3.6%, starting with benefits payable in January 2027. SSI payments rise from December 31, 2026.
I had two jobs and too much Social Security tax was withheld. What do I do?
Claim the excess as a credit on your federal return. It only applies when two or more employers each withheld; if one employer withheld too much, that employer has to fix it.
Where these rules come from
- SSA: Social Security announces 3.6 percent benefit increase for 2027 (October 14, 2026)
- IRS: Self-employment tax (Social Security and Medicare taxes)
- IRS: Questions and answers for the Additional Medicare Tax
General information, current when written, not advice about your situation. Fees and forms change; the official pages above are the authority.