Million-dollar earners have stopped paying into Social Security for 2026
A mobile billboard with the image of Jeff Bezos in Washington on May 17, 2021, calls for higher taxes on the ultra-rich.
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Earnings up to $184,500 in 2026 are subject to Social Security payroll tax.
As of Monday, individuals with $1 million in annual wage and salary earnings have stopped paying into the program for this calendar year. Center for Economic and Policy Research.
Wealthy individuals stop paying into the program even earlier. Billionaire tech mogul Elon Musk may have paid all of this year’s Social Security taxes on New Year’s Day, depending on how his income is taxed, labor economist Teresa Ghilarducci said. guessed.
How does the Social Security payroll tax work?
Social Security and Medicare payroll taxes together are known as FICA, otherwise known as the Federal Insurance Contributions Act.
Workers and employers each pay 6.2% of their wages into Social Security. payroll taxes. They also each contribute 1.45% to Medicare, and unlike Social Security, Medicare taxes apply to all earnings with no income limits. There is also a 0.9% Medicare surcharge for high income earners.
Self-employed workers are subject to the full rate of 12.4% for Social Security and 2.9% for Medicare, but they can also claim a deduction of half of their FICA taxes over the limit.
With calls to raise taxes on the wealthy and a shortage in Social Security funding emerging, some advocates and lawmakers are pushing to raise the payroll tax cap so high-income earners can pay more into the program.
In the future, Social Security may not be able to pay benefits as intended, said Hayley Brown, a workforce and disability researcher at the Center for Economic and Policy Research, a left-leaning think tank.
“Meanwhile, we have people who have the capacity to pay into the system throughout the year and stop before three months into the year,” Brown said.
Most of workers’ earnings exceed payroll tax cap
The Social Security Administration is currently facing depletion dates for the trust funds it uses to help provide monthly payments to millions of beneficiaries.
But the benefits won’t completely run out, as money continues to come into the program through payroll taxes. Instead, the latest estimates from the Social Security Administration’s actuaries show that the trust fund the program uses to pay retirement benefits is It runs out in 2032Monthly payments will be reduced by 24% unless Congress acts to close the gap.
Increasing the Social Security payroll tax cap is among the options lawmakers could consider.
Research shows the choice is popular with consumers. Raising the payroll tax cap to cover earnings above $400,000, but not increasing the benefits of those extra contributions, was the most popular of all policy options, according to one study. 2025 survey From the National Academy of Social Security, AARP, National Institute for Retirement Security, and the U.S. Chamber of Commerce. The group of retirement policy and business organizations surveyed 2,243 Americans.
Other popular options identified from this research were gradually increasing the payroll tax rate from 6.2% to 7.2% and keeping age 67 as the full retirement age.
Earnings inequality has contributed to Social Security’s current trust fund deficit. latest research From the Roosevelt Institute, a liberal think tank, student network, and nonprofit partner, to the Franklin D. Roosevelt Presidential Library and Museum.
The share of earnings subject to Social Security payroll taxes was 90% in 1983. But the payroll tax hasn’t increased fast enough to maintain that 90%, according to the Roosevelt Institute. Roosevelt Institute research found that in 2000, the rate was about 82.5% and has remained at that level, with some fluctuations, since then.
About 6 percent of workers earn above the cap, and this rate remains stable. But real earnings for these workers rose by an “unexpectedly large” average of 62% from 1983 to 2000, according to the Roosevelt Institute. Meanwhile, the average real earnings of the remaining 94% of workers with earnings below the ceiling increased by only 17% in those years.
How would raising the tax cap affect Social Security solvency?
Raising the payroll tax cap will not be a panacea for Social Security’s funding problems.
Removing the taxable maximum from this year and not providing benefit credits for tax contributions above the earnings threshold will correct 67 percent of the long-term actuarial balance. Social Security Administration. Other variations of this change might not go that far, depending on factors such as taxed income thresholds such as $250,000 or $400,000 and above, and whether those contributions would result in higher benefit payments.
Jason Fichtner, former deputy commissioner of the Social Security Administration and current executive director of the LIMRA Lifetime Income Alliance, said during a March 3 panel discussion at the National Institute on Retirement Security annual retirement policy conference in Washington that if the payroll tax cap had been eliminated years ago, the results would have gone even further toward supporting the program.
“If we had just raised the taxable maximum, gotten rid of the cap, just that one policy … that would have gotten us to 75 years of solvency 15 years ago,” Fichtner said. “We lost this important option.”
Not everyone agrees on eliminating the Social Security payroll tax cap. According to the report, the increase will affect not only the rich but also upper middle class individuals and families. Manhattan InstituteA conservative think tank. It turns out it would also limit the ability to raise taxes to pay for other initiatives like Medicare, which also face a funding crunch.
But other experts and voters say the change is at the top of their wish lists for Social Security reform.
“This appears to be the fairest and most direct way to support the financing of Social Security, and it also speaks to Social Security’s status as a social insurance program,” Brown said.
CEPR’s website includes a calculator that determines when individuals will stop paying into the scheme this year, based on their earnings.
“I hope people use this tool not just to see when to stop paying, but to experiment and see what it would be like for someone to make $200,000, $300,000… and then try to reconcile that with what they think a fair system would look like,” Brown said.
