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Provisions Affecting Payroll Tax Rates

Present law Social Security and Medicare tax rates

These provisions modify the current-law OASDI payroll tax rate of 12.4 percent (6.2 percent each for employees and employers). We provide a summary list of all options in this category. For each provision listed below, we provide an estimate of the financial effect on the OASDI program over the long-range period (the next 75 years) and for the 75th year. In addition, we provide graphs and detailed single year tables.

All estimates are based on the intermediate assumptions described in the 2010 Trustees Report. Choose the type of estimates (summary or detailed) from the list of provisions.

The provisions are grouped as follows:

  • E1: Payroll-tax rate changes with no changes in the taxable maximum.
  • E2: Additional payroll taxes from earnings above the taxable maximum.

Number Table and graph selection
E1.1 Raise payroll tax rates (for employees and employers combined) by 2.1 percentage points in 2011 and later.
Summary measures and graphs   (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing the provision (effective dates may be different)
E1.2 Raise payroll tax rates (for employees and employers combined) by 1.9 percentage points in 2023-52 (to 14.3% combined) and by an additional 1.9 percentage points in 2053 (to 16.2% combined).
Summary measures and graphs   (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing the provision (effective dates may be different)
E1.3 Beginning in 2011, reduce the combined OASDI payroll tax rate from 12.4 percent to 11.4 percent.
Summary measures and graphs   (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing the provision (effective dates may be different)
E1.4 Raise the payroll tax rates gradually (for employees and employers combined) by 0.1 percentage points in 2016; continue this increase each year for 20 years. By 2035, the combined employee and employer payroll tax rate would be 14.4 percent.
Summary measures and graphs   (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing the provision (effective dates may be different)
E1.5 Increase the payroll tax rate (currently 12.4 percent) to 12.6 percent in 2013, 12.9 percent in 2021, 13.1 in percent in 2031, 13.9 percent in 2041, 13.5 percent in 2051, and 13.3 percent in 2061.
Summary measures and graphs   (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing the provision
E1.6 Increase the payroll tax rate (currently 12.4 percent) to 12.6 percent in 2013, 12.9 percent in 2021, 13.3 in percent in 2031, 13.8 percent in 2041, 14.4 percent in 2061, and 14.5 percent in 2076.
Summary measures and graphs   (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing the provision
E1.7 Increase the payroll tax rate (currently 12.4 percent) to 12.7 percent in 2013, 13.0 percent in 2026, 13.3 percent in 2041, 14.0 percent in 2061, 14.5 percent in 2071, and 14.7 percent in 2081.
Summary measures and graphs   (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing the provision
E2.1 Beginning in 2011, make all earnings subject to the payroll tax (but retain the current-law taxable maximum for benefit calculations).
Summary measures and graphs   (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing the provision (effective dates may be different)
E2.2 Beginning in 2011, make all earnings subject to the payroll tax and credit them for benefit purposes.
Summary measures and graphs (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing the provision (effective dates may be different)
E2.3 Determine the level of the contribution and benefit base such that 90 percent of the earnings would be subject to the payroll tax (phased in 2011-2020). All earnings subject to the payroll tax would be used in determining benefits.
Summary measures and graphs (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing the provision (effective dates may be different)
E2.4 Make 90% of the earnings subject to the payroll tax (phased in 2011-2020), but retain the current-law taxable maximum for benefit purposes. This estimate considers all self-employed earnings in computing the percentage of earnings subject to the payroll tax.
Summary measures and graphs (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing the provision (effective dates may be different)
E2.5 Raise the taxable maximum amount (the contribution and benefit base) to include 90 percent of total OASDI covered earnings. Phase in this increase gradually between 2012 and 2017. Benefit computations would reflect all earnings up to the new taxable maximum.
Summary measures and graphs (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing the provision (effective dates may be different)
E2.6 Impose a 3 percent payroll tax on OASDI covered earnings above the current taxable maximum starting in 2011. Benefit computations would not reflect any earnings above the taxable maximum amount.
Summary measures and graphs (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing the provision (effective dates may be different)
E2.7 In 2011 through 2013, raise the OASDI contribution and benefit base from $106,800 to $115,200 (in 2009 AWI indexed dollars). For years after 2013, the contribution and benefit base would be increased based on changes in SSA's average wage index. Additional earnings subject to the OASDI payroll tax would be credited for benefit calculation purposes.
Summary measures and graphs (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing the provision (effective dates may be different)
E2.8 Impose a 6 percent payroll tax on OASDI covered earnings above the current taxable maximum starting in 2011. Benefit computations would not reflect any earnings above the taxable maximum amount.
Summary measures and graphs (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing the provision
E2.9 Beginning in 2011, make all earnings subject to the OASDI payroll tax and give benefit credit using an PIA formula that is extended to provide less credit for those with AIMEs higher than the current-law maximum AIME level. The high end of the benefit formula, applied to 2009, would be: 15 percent of AIME between $4,483 and $8,900 ($106,800 divided by 12), plus 3 percent of AIME over $8,900.
Summary measures and graphs (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing the provision
E2.10 (2011) Beginning in 2011, raise the taxable maximum each year by an additional 2 percent over the current-law, wage-indexed amount until total earnings subject to payroll taxes equals 90 percent of all covered earnings. Credit the earnings for benefit purposes.
Summary measures and graphs (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing the provision
E2.10 (2012) Increase contribution and benefit base ("taxable maximum") by an additional 2 percent per year beginning in 2012 until taxable earnings are equal to 90 percent of covered earnings. Additional taxable earnings would be credited for the purpose of computing benefits.
Summary measures and graphs (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing the provision
E2.11 Make all earnings subject to the employer OASDI payroll tax beginning in 2011. For the employee OASDI payroll tax and for benefit calculation purposes, the taxable maximum would equal the present-law taxable maximum for years 2010 and earlier. Beginning in 2011, the taxable maximum would be raised each year by an additional 2 percent over the current-law, wage-indexed amount until earnings subject to payroll taxes equals 90 percent of all covered earnings.
Summary measures and graphs (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing the provision
E2.12 Apply the following payroll tax rate above the current-law taxable maximum, with no credit toward benefits: 2.0 percent in 2013 and 3.0 percent in 2061.
Summary measures and graphs (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing the provision
E2.13 Increase the taxable maximum (contribution and benefit base) by an additional 2 percent over normal indexing starting in 2013, until 90 percent of OASDI covered earnings is taxable (achieved in 2050). The present-law taxable maximum is retained for benefit purposes; no benefit credit is given for earnings above the present-law taxable maximum.
Summary measures and graphs (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing the provision
E2.14 Apply the following payroll tax rates above the current-law taxable maximum, with no credit toward benefits: 2.0 percent in 2013, 3.0 percent in 2026, 3.5 percent in 2041, 4.5 percent in 2051, and 5.5 percent in 2061.
Summary measures and graphs (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing the provision
E2.15 Apply 2 percent payroll tax rate on earnings over $200,000 in 2018, with the $200,000 threshold wage-indexed after 2018. Give proportional benefit credit for additional earnings in AIME for benefit computation.
Summary measures and graphs (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing the provision
E2.16 Apply 2 percent payroll tax rate on earnings over $200,000 in 2018, with the $200,000 threshold wage-indexed after 2018. Give no benefit credit for additional earnings in AIME for benefit computation.
Summary measures and graphs (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing the provision
E2.17 Apply 3 percent payroll tax rate on earnings over $200,000 in 2018, with the $200,000 threshold wage-indexed after 2018. Give proportional benefit credit for additional earnings in AIME for benefit computation.
Summary measures and graphs (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing the provision
E2.18 Apply 3 percent payroll tax rate on earnings over $200,000 in 2018, with the $200,000 threshold wage-indexed after 2018. Give no benefit credit for additional earnings in AIME for benefit computation.
Summary measures and graphs (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing the provision
E2.19 Apply 4 percent payroll tax rate on earnings over $200,000 in 2018, with the $200,000 threshold wage-indexed after 2018. Give proportional benefit credit for additional earnings in AIME for benefit computation.
Summary measures and graphs (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing the provision
E2.20 Apply 4 percent payroll tax rate on earnings over $200,000 in 2018, with the $200,000 threshold wage-indexed after 2018. Give no benefit credit for additional earnings in AIME for benefit computation.
Summary measures and graphs (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing the provision
E2.21 Apply 2 percent payroll tax rate on earnings over $300,000 in 2018, with the $300,000 threshold wage-indexed after 2018. Give proportional benefit credit for additional earnings in AIME for benefit computation.
Summary measures and graphs (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing the provision
E2.22 Apply 2 percent payroll tax rate on earnings over $300,000 in 2018, with the $300,000 threshold wage-indexed after 2018. Give no benefit credit for additional earnings in AIME for benefit computation.
Summary measures and graphs (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing the provision
E2.23 Apply 3 percent payroll tax rate on earnings over $300,000 in 2018, with the $300,000 threshold wage-indexed after 2018. Give proportional benefit credit for additional earnings in AIME for benefit computation.
Summary measures and graphs (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing the provision
E2.24 Apply 3 percent payroll tax rate on earnings over $300,000 in 2018, with the $300,000 threshold wage-indexed after 2018. Give no benefit credit for additional earnings in AIME for benefit computation.
Summary measures and graphs (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing the provision
E2.25 Apply 4 percent payroll tax rate on earnings over $300,000 in 2018, with the $300,000 threshold wage-indexed after 2018. Give proportional benefit credit for additional earnings in AIME for benefit computation.
Summary measures and graphs (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing the provision
E2.26 Apply 4 percent payroll tax rate on earnings over $300,000 in 2018, with the $300,000 threshold wage-indexed after 2018. Give no benefit credit for additional earnings in AIME for benefit computation.
Summary measures and graphs (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing the provision
E2.27 Apply 2 percent payroll tax rate on earnings over $400,000 in 2018, with the $400,000 threshold wage-indexed after 2018. Give proportional benefit credit for additional earnings in AIME for benefit computation.
Summary measures and graphs (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing the provision
E2.28 Apply 2 percent payroll tax rate on earnings over $400,000 in 2018, with the $400,000 threshold wage-indexed after 2018. Give no benefit credit for additional earnings in AIME for benefit computation.
Summary measures and graphs (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing the provision
E2.29 Apply 3 percent payroll tax rate on earnings over $400,000 in 2018, with the $400,000 threshold wage-indexed after 2018. Give proportional benefit credit for additional earnings in AIME for benefit computation.
Summary measures and graphs (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing the provision
E2.30 Apply 3 percent payroll tax rate on earnings over $400,000 in 2018, with the $400,000 threshold wage-indexed after 2018. Give no benefit credit for additional earnings in AIME for benefit computation.
Summary measures and graphs (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing the provision
E2.31 Apply 4 percent payroll tax rate on earnings over $400,000 in 2018, with the $400,000 threshold wage-indexed after 2018. Give proportional benefit credit for additional earnings in AIME for benefit computation.
Summary measures and graphs (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing the provision
E2.32 Apply 4 percent payroll tax rate on earnings over $400,000 in 2018, with the $400,000 threshold wage-indexed after 2018. Give no benefit credit for additional earnings in AIME for benefit computation.
Summary measures and graphs (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing the provision
E2.33 Make 90% of the earnings subject to the payroll tax (phased in 2011-2020). In addition, apply a tax rate of 6.2 percent for earnings above the revised taxable maximum, phased in from 2011-2020. This additional tax rate would be paid by employers on wages of their employees, and by self-employed workers on their earnings. Benefit computations for workers would only reflect earnings below the revised taxable maximum.
Summary measures and graphs (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing the provision
E2.34 Increase contribution and benefit base ("taxable maximum") by an additional 2 percent per year beginning in 2012 until taxable earnings are equal to 90 percent of covered earnings (estimated to occur in 2049). Additional taxable earnings would be credited for the purpose of computing benefits. Create a new bend point equal to the current-law taxable maximum and provide a 5 percent PIA formula factor for AIME above the new bend point.
Summary measures and graphs (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing the provision
E2.35 Eliminate the contribution and benefit base entirely beginning for 2017 and later; phase in the inclusion of earnings above the current contribution and benefit base for years 2011 through 2016. Assess the full Social Security payroll tax rate of 12.4 percent on the additional earnings. The primary insurance amount (PIA) would be determined in two components. The first component would be based on the average indexed monthly earnings (AIME), restricted to earnings at the level of the current-law contribution and benefit base ($106,800 for 2010) for each year. The second component of the PIA would be computed using the "AIME+", which would be equal to the sum of the indexed earnings in excess of the current-law contribution and benefit base for the 35 years included in the AIME, divided by 420. The second component of PIA would be equal to 3 percent of AIME+ up to $11,933 ((equals $250,000-$106,800)/12) and 0.25 percent for AIME+ above this level for beneficiaries newly eligible in 2011. For beneficiaries newly eligible for benefits after 2011, the "bend point" of $11,933 would be indexed by the national average wage index (AWI) in the same manner as for the bend points in the first component of the PIA.
Summary measures and graphs (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing the provision
E2.36 Apply 12.4 payroll tax rate on earnings above $250,000 starting in 2012. The $250,000 threshold does not increase in future years; when the current-law contribution and benefit base exceeds $250,000, apply 12.4 percent tax rate to earnings above the base. Earnings subject to tax above the threshold would not be credited for the purpose of computing benefits.
Summary measures and graphs (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing the provision

Above provisions
Summary measures
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Last reviewed or modified March 15, 2011