The vast majority of Americans don’t make enough money to ever worry about Social Security’s taxable maximum amount, and some probably have no idea that Social Security taxes are not applied to a large percentage of income higher earners make, but for those who do earn well over $100,000 a year, there has been a correction since the previous numbers were released in October.
Social Security taxes are only charged up to a certain amount of income. In 2017 that amount was $127,200. All income earned after that was not taxed for Social Security purposes. In October Social Security announced the highest amount taxed would increase to $128,700 in 2018, but adjusted that number to $128,400, according to a press release from Social Security. In the press release, Social Security explained the reason for the change.
“In October of each year, the Social Security Administration announces adjustments that take effect the following January that are based on the increase in average wages. Based on the wage data Social Security had at the time of the October 13, 2017, announcement, the maximum amount of earnings subject to the Social Security tax (taxable maximum) was to increase to $128,700 in 2018, from $127,200 in 2017. The new amount for 2018, based on updated wage data reported to Social Security, is $128,400.”
For decades now government officials have known Social Security is eventually going to face a revenue crisis. One of the solutions that has been proposed to increase Social Security’s revenue was to apply Social Security taxes to all income and not allow those who make more than most Americans to bypass Social Security taxes on their higher earnings. This proposal has fallen on deaf ears. There is no reason a person making $50,000 a year should be taxed by Social Security on 100 percent of their income while someone making $1 million a year only pays Social Security taxes on a little more than 10 percent of their earnings.
