Social Security wage base rises to $192,300 on Jan. 1; the cap on the 6.2% tax goes up $7,800

The Social Security Administration set the 2027 taxable maximum at $192,300, up from $184,500 in 2026, in its Oct. 14, 2026 announcement. The 6.2% Social Security tax applies to the first $192,300 of each worker's pay, for both the employer and the employee, and the 3.6% cost-of-living increase for benefits starts in January.

The change only touches pay above $184,500. Take a 25-person electrical contractor with an owner on a $240,000 W-2 salary and one estimator at $120,000. The estimator is under the cap and sees no change. The owner's Social Security tax goes from $11,439 to $11,922.60, which is $483.60 more for the company and $483.60 more from the owner's pay. Total: $967.20 a year. If nobody on your payroll earns over $184,500, nothing changes for you. If your software has the 2026 cap hard-coded, it will stop withholding at the old number and you will under-withhold in the fall of 2027. Medicare has no cap and is not part of this change.