The maximum wage base for assessing the 6.2% payroll tax to fund Old Age, Survivors, and Disability Insurance (OASDI) is to increase to $176,100 for 2025, the Social Security Administration in the United States announced on October 10. The maximum is $168,600 for calendar year 2024.
Employees and employers must each contribute 6.2% of taxable wages up to the wage base, but earnings beyond the wage base amount are not assessed the tax. This means employees making at least $176,100 in 2025 will pay a maximum of $10,918.20 into the fund (an increase of $465 over 2024), with employers paying an equal share.
The self-employed in the U.S. pay both the employer and employee share when paying their taxes.
While the cost-of-living change the agency uses to elevate several benefit amounts is 2.5% for 2025, the wage base increase does not apply that figure in calculating the taxable amount for a year. Instead, the agency applies a national average wage amount that normally increases year-over-year to calculate the OASDI wage base.
A separate Health Insurance or Medicare tax (HI) is not subject to the wage base. The employee requirement to contribute to Medicare or HI remains at 1.45% on all earnings, with a similarly equal contribution from employers. Individuals with earned income of more than $200,000 in a year ($250,000 if filing taxes jointly as married) pay an additional 0.9% in Medicare for amounts earned above the threshold, but employers are not required to match the additional 0.9% assessment.
Social Security payroll tax coverage thresholds also rise for election workers and domestic employees in 2025. For jurisdictions to be required to withhold and contribute on pay to election workers, the workers will need to be paid at least $2,400 in 2025, up from $2,300 in 2024. Employers of domestic workers will be required to withhold and contribute OASDI and Medicare taxes if employee wages are at least $2,800 in 2025 ($2,700 in 2024).
According to Social Security, most wage earners have no coverage threshold; wages are taxable at the first dollar paid for employment.
Author: Michael Baer
Michael Baer is president of Baer Unlimited, an independent research, analysis, and communications provider that helps Payroll modernize operations, stay compliant, and improve the use and security of their data. For more on these issues discussed above, contact him directly at mike.baer@baerunlimited.com, or book Michael as a mentor through the GPA Mentor page.
The maximum wage base for assessing the 6.2% payroll tax to fund Old Age, Survivors, and Disability Insurance (OASDI) is to increase to $176,100 for 2025, the Social Security Administration in the United States announced on October 10. The maximum is $168,600 for calendar year 2024.
Employees and employers must each contribute 6.2% of taxable wages up to the wage base, but earnings beyond the wage base amount are not assessed the tax. This means employees making at least $176,100 in 2025 will pay a maximum of $10,918.20 into the fund (an increase of $465 over 2024), with employers paying an equal share.
The self-employed in the U.S. pay both the employer and employee share when paying their taxes.
While the cost-of-living change the agency uses to elevate several benefit amounts is 2.5% for 2025, the wage base increase does not apply that figure in calculating the taxable amount for a year. Instead, the agency applies a national average wage amount that normally increases year-over-year to calculate the OASDI wage base.
A separate Health Insurance or Medicare tax (HI) is not subject to the wage base. The employee requirement to contribute to Medicare or HI remains at 1.45% on all earnings, with a similarly equal contribution from employers. Individuals with earned income of more than $200,000 in a year ($250,000 if filing taxes jointly as married) pay an additional 0.9% in Medicare for amounts earned above the threshold, but employers are not required to match the additional 0.9% assessment.
Social Security payroll tax coverage thresholds also rise for election workers and domestic employees in 2025. For jurisdictions to be required to withhold and contribute on pay to election workers, the workers will need to be paid at least $2,400 in 2025, up from $2,300 in 2024. Employers of domestic workers will be required to withhold and contribute OASDI and Medicare taxes if employee wages are at least $2,800 in 2025 ($2,700 in 2024).
According to Social Security, most wage earners have no coverage threshold; wages are taxable at the first dollar paid for employment.
Author: Michael Baer
Michael Baer is president of Baer Unlimited, an independent research, analysis, and communications provider that helps Payroll modernize operations, stay compliant, and improve the use and security of their data. For more on these issues discussed above, contact him directly at mike.baer@baerunlimited.com, or book Michael as a mentor through the GPA Mentor page.