The Social Security Administration has announced that the maximum amount of taxable earnings for Social Security will increase to $176,100 in 2025, up from $168,600 in 2024. This means that higher earners will contribute more toward Social Security taxes. The Social Security tax rate of 12.4 percent, which is split evenly between workers and employers, has remained the same since 1990.
However, the maximum amount of income subject to this tax has been increasing over the years.
Changes in Social Security taxes
For workers who have more than one job in a year, their employers must withhold Social Security taxes from their wages.
As a result, the total Social Security taxes withheld could exceed the maximum limit. In such cases, workers can claim a refund from the IRS for any Social Security taxes withheld that exceeded the maximum amount when filing their tax returns. This change in the maximum taxable earnings for Social Security is one of several adjustments that will impact our wallets and bank accounts in 2025.
It is important for workers, especially high earners, to be aware of these changes and plan accordingly to ensure they are contributing the appropriate amount to Social Security and not overpaying in taxes.
