The maximum amount of earnings subject to Social Security tax for individuals is set to rise to $176,100 from $168,600 in 2025, the Social Security Administration (SSA) said on Oct. 10. 

According to the SSA, the tax rate for each employee in 2025 is 7.65%, while its 15.30% for those who are self-employed. Both are unchanged from 2024. 

The SSA explained that the 7.65% tax rate is the combined rate for Social Security and Medicare. The Social Security portion or Old-Age, Survivors and Disability Insurance (OASDI) is 6.2% on earnings of up to $176,100. 

The Medicare portion or hospital insurance is 1.45% on all earnings. Additionally, since Jan. 2013, individuals with earned income of over $200,000—$250,000 for married couples who file jointly and $125 for married taxpayers filing separately—pay an added 0.9% in Medicare taxes.  

According to Journal of Accountancy, at or above the wage base limit of $176,100, both the employee and the employer will each pay $10,918.20 in tax, representing a rise of $465 for each party in 2025.  

The SSA explained that the earnings limit for workers younger than the "full" retirement age will increase to $23,400, while the earnings limit for people reaching their “full” retirement age in 2025 will increase to $62,160. Earnings are not limited to workers who are "full" retirement age or older for the entire year. 

In terms of the cost-of-living adjustment (COLA) increase, the SSA announced on Oct. 10 that Social Security benefits and Supplemental Security Income (SSI) payments for over 72.5 million individuals will increase 2.5 % starting in 2025.  

The increase means that starting in January, on average, social security retirement benefits will increase by about $50 per month.  

“Social Security benefits and SSI payments will increase in 2025, helping tens of millions of people keep up with expenses even as inflation has started to cool,” said Martin O'Malley, Commissioner of Social Security.   

Nearly 68 million Social Security beneficiaries will experience a 2.5% cost-of-living adjustment (COLA) starting in Jan. 2025. On Dec. 31, increased payments to almost 7.5 million SSI recipients will begin. It is important to note that some individuals receive both Social Security benefits and SSI.         

The COLA increase has averaged about 2.6% over the last decade and was 3.2% in 2024.