By Stephanie M. Casey, CPA, Tax Senior Manager

Overview of Social Security wage base changes
The Social Security Administration (SSA) has announced the annual cost-of-living adjustment to the maximum amount of earnings subject to Social Security tax (i.e., the taxable wage base).
For payroll and some 401(k) plans that provide for profit -sharing contributions, employers should take note of the following changes that begin on January 1, 2025.
2025 maximum earnings cap for payroll taxes
Payroll | 2025 Maximum Earnings | 2024 Maximum Earnings |
---|---|---|
Social Security | $176,100 | $168,600 |
For 2025, employers must withhold the following amounts:
Tax Type | Rate | Wage Limit | Maximum Tax | Change from 2024 |
---|---|---|---|---|
Social Security | 6.2% | $176,100 | $10,918.20 | Up from $10,453.20 |
Changes for employees who continue working while collecting Social Security benefits
Social security can be collected starting at age 62. Beneficiaries under the full retirement age who are still working receive a reduced monthly benefit if they earn more than the annually adjusted threshold. Full retirement age for beneficiaries born in 1957 is 66 years and 6 months. For beneficiaries born in 1958 the age is 66 years and 8 months.
For 2025, $1 in benefits will be withheld for every $2 in earnings above $23,400 (increase from $22,320 in 2024). Those who will reach retirement age during 2025 will have $1 in benefits withheld for every $3 in earnings exceeding $62,160 (up from $59,520) until the month they reach full retirement age. Beyond that month, there is no limit.
Next steps for employers
Prepare your business and your employees before January 1, 2025, by taking the following steps:
- Notify employees whose earnings exceed the current 2024 cap of $168,600 of the increase and how it may impact their net take home pay during 2025.
- Modify your payroll systems to account for the higher taxable wage base of $176,100
Your Keiter Opportunity Advisors will continue to keep you updated on new and changing regulations that may impact your business.
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About the Author
The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.