What is the Social Security wage base for 2027?
The 2027 taxable maximum the Social Security Administration announced in October, what it changes in payroll cost for a $1M to $5M business, and the Medicare tax that has no cap.
The Social Security wage base for 2027 is $192,300, up from $184,500 in 2026. Employees and employers each pay the Social Security tax only on wages up to that amount, and the Medicare tax applies to every dollar with no cap. The Social Security Administration announced the figure in October with its 3.6 percent cost-of-living adjustment for 2027.
## The 2027 numbers
From the SSA's 2027 fact sheet:
- Maximum earnings taxable for Social Security: $192,300 (2026: $184,500). - Medicare: no limit. - Combined Social Security and Medicare rate for an employee: 7.65 percent, unchanged. The employer matches it. - Self-employed rate: 15.30 percent, unchanged. - One quarter of coverage: $1,970 of earnings (2026: $1,890).
The 7.65 percent is 6.2 percent for Social Security and 1.45 percent for Medicare. The Journal of Accountancy's write-up of the announcement adds that the extra 0.9 percent Medicare tax still applies to an employee's wages above $200,000, which is withheld from the employee and has no employer match.
## What it changes in your payroll budget
For most people on a $1M to $5M company's payroll, nothing. The wage base only matters for someone paid more than $184,500. For those people, the extra $7,800 of wages now subject to the 6.2 percent tax adds $483.60 of employer tax per person in 2027, and the same again withheld from their pay. That figure is our own arithmetic from the SSA numbers.
At this size the people above the line are usually the owner, a partner or a senior hire. If you pay yourself a salary through an S corporation, your own wages count, and the employer half comes out of the company. A sole proprietor or a partner pays the self-employed rate on net earnings up to the same $192,300.
## Three things to do before January
- **Update the payroll system.** Most providers load the new base automatically, but check the first January run for anyone near the cap. - **Budget the full year for high earners.** Social Security tax stops once a person's wages for the year pass the wage base, so cash flow for that person changes partway through the year. Plan for the full employer amount, which is $11,922.60 at the 2027 base (our arithmetic, 6.2 percent of $192,300), plus 1.45 percent Medicare on all of it. - **Price the raise in total cost.** A raise for someone below the cap costs the raise plus 7.65 percent. For someone already over it, the employer cost is the raise plus 1.45 percent.
## Where this fits
Payroll is the largest cost line for most service firms in this range, and every hire or raise moves it. If margin is tight, the cap is a small part of a bigger question about whether price, delivery or your own time is the real limit. The six-question bottleneck check on this site shows which stage is holding growth back before you set the 2027 payroll plan.
This note is general information. For your own payroll and tax situation, talk to your accountant.