Provisions Affecting Payroll Taxes
These provisions modify: (1) the current-law OASDI payroll tax rate of 12.4 percent (6.2 percent each for employees and employers); or (2) the contribution and benefit base (taxable maximum), which limits the amount of earnings subject to payroll tax and credited for benefit computation. We provide a summary list of all options (printer-friendly PDF version) 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. We base all estimates on the intermediate assumptions described in the 2020 Trustees Report.
Choose the type of estimates (summary or detailed) from the list of provisions.
We group these provisions as follows:| Number | Table and graph selection |
|---|---|
| E1.1 |
Increase the payroll tax rate (currently 12.4 percent) to 15.8 percent
in 2021 and later.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E1.2 |
Increase the payroll tax rate (currently 12.4 percent) to 15.9 percent in
2033-2062, and to 19.4 percent in years 2063 and later.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E1.4 |
Increase the payroll tax rate (currently 12.4 percent) by 0.1 percentage point
each year from 2026-2045, until the rate reaches 14.4 percent in 2045 and later.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memoranda containing this or a similar provision: |
| E1.8 |
Increase the payroll tax rate (currently 12.4 percent) by 0.1 percentage
point each year from 2023-2028, until the rate reaches 13.0 percent for
2028 and later.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E1.9 |
Increase the payroll tax rate (currently 12.4 percent) by 0.1 percentage
point each year from 2024-2047, until the rate reaches 14.8 percent in
2047. Then increase the payroll tax rate an additional 0.1 percentage point
in each year from 2086-2090, until the rate reaches 15.3 percent for 2090
and later.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memoranda containing this or a similar provision: |
| E1.10 |
Increase the payroll tax rate by 0.1 percentage point per year for 2022 through
2031 so that it equals 13.4 percent for 2031 and later. The increase would be
split evenly between the employer and employee share, and would be split between
OASI and DI in proportion to currently scheduled payroll tax rates.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memoranda containing this or a similar provision: |
| E2.1 |
Eliminate the taxable maximum in years 2021 and later, and apply full 12.4 percent
payroll tax rate to all earnings. Do not provide benefit credit for earnings above
the current-law taxable maximum.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memoranda containing this or a similar provision: |
| E2.2 |
Eliminate the taxable maximum in years 2021 and later, and apply full 12.4
percent payroll tax rate to all earnings. Provide benefit credit for earnings
above the current-law taxable maximum.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E2.3 |
Eliminate the taxable maximum in years 2021 and later, and apply full 12.4
percent payroll tax rate to all earnings. Provide benefit credit for earnings
above the current-law taxable maximum. Create a new bend point at the current-law
taxable maximum with a 3 percent formula factor applying above the new bend point.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E2.4 |
Eliminate the taxable maximum for years 2027 and later (phased in 2021-2027),
and apply full 12.4 percent payroll tax rate to all earnings. Provide benefit
credit for earnings above the current-law taxable maximum that are subject to
the payroll tax, using a secondary PIA formula. This secondary PIA formula involves:
(1) an "AIME+" derived from annual earnings from each year after 2020 that
were in excess of that year's current-law taxable maximum; (2) a new bend point
equal to 134 percent of the monthly current-law taxable maximum; and (3) formula
factors of 3 percent and 0.25 percent below and above the new bend point, respectively.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memoranda containing this or a similar provision: |
| E2.5 |
Apply 12.4 percent payroll tax rate on earnings above $250,000 starting in 2021,
and tax all earnings once the current-law taxable maximum exceeds $250,000. Do not
provide benefit credit for additional earnings taxed.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memoranda containing this or a similar provision: |
| E2.6 |
Apply a 3 percent payroll tax on earnings above the current-law taxable
maximum starting in 2021. Do not provide benefit credit for earnings above
the current-law taxable maximum.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E2.8 |
Apply a 2 percent payroll tax on earnings above the current-law taxable
maximum for years 2023-2070, and a 3 percent rate for years 2071 and later.
Do not provide benefit credit for earnings above the current-law taxable maximum.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E2.11 |
Eliminate the taxable maximum in years 2026 and later. Phase in elimination by
taxing all earnings above the current-law taxable maximum at: 2.48 percent in 2022,
4.96 percent in 2023, and so on, up to 12.40 percent in 2026. Provide benefit credit
for earnings above the current-law taxable maximum that are subject to the payroll
tax, using a secondary PIA formula. This secondary PIA formula involves: (1) an
"AIME+" derived from annual earnings from each year after 2020 that were in excess
of that year's current-law taxable maximum; and (2) a formula factor of 5 percent
on this newly computed "AIME+".
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memoranda containing this or a similar provision: |
| E2.12 |
Eliminate the taxable maximum in years 2032 and later. Phase in elimination
by taxing all earnings above the current-law taxable maximum at: 1.24 percent
in 2023, 2.48 percent in 2024, and so on, up to 12.40 percent in 2032. Provide
benefit credit for earnings above the current-law taxable maximum. Create a
new bend point at the current-law taxable maximum with a 3 percent formula
factor applying above the new bend point.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E2.13 |
Apply OASDI 12.4 percent payroll tax rate on earnings above $400,000
starting in 2022, and tax all earnings once the current-law taxable
maximum exceeds $400,000. Provide benefit credit for earnings above
the current-law taxable maximum that are subject to the payroll tax,
using a secondary PIA formula. This secondary PIA formula involves:
(1) an "AIME+" derived from annual earnings from each year after 2021
that were in excess of that year's current-law taxable maximum; and
(2) a formula factor of 2 percent on this newly computed "AIME+".
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memoranda containing this or a similar provision: |
| E2.14 |
Apply OASDI 12.4 percent payroll tax rate on earnings above $250,000
starting in 2022, and tax all earnings once the current-law taxable
maximum exceeds $250,000. Provide benefit credit for earnings above
the current-law taxable maximum that are subject to the payroll tax,
using a secondary PIA formula. This secondary PIA formula involves:
(1) an "AIME+" derived from annual earnings from each year after 2021
that were in excess of that year's current-law taxable maximum; and
(2) a formula factor of 2 percent on this newly computed "AIME+".
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E2.15 |
Apply OASDI 12.4 percent payroll tax rate on earnings above $300,000
starting in 2022, and tax all earnings once the current-law taxable
maximum exceeds $300,000. Provide benefit credit for earnings above
the current-law taxable maximum that are subject to the payroll tax,
using a secondary PIA formula. This secondary PIA formula involves:
(1) an "AIME+" derived from annual earnings from each year after 2021
that were in excess of that year's current-law taxable maximum; and
(2) a formula factor of 3 percent on this newly computed "AIME+".
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E3.1 |
Increase the taxable maximum such that 90 percent of earnings would
be subject to the payroll tax (phased in 2021-2030). Provide benefit
credit for earnings up to the revised taxable maximum.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E3.2 |
Increase the taxable maximum such that 90 percent of earnings would be
subject to the payroll tax (phased in 2021-2030). Do not provide benefit
credit for additional earnings taxed.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E3.5 |
Increase the taxable maximum each year by an additional 2 percent beginning
in 2021 until taxable earnings equal 90 percent of covered earnings. Provide
benefit credit for earnings up to the revised taxable maximum.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memoranda containing this or a similar provision: |
| E3.6 |
Increase the taxable maximum each year by an additional 2 percent
beginning in 2023 until taxable earnings equal 90 percent of covered
earnings. Do not provide benefit credit for additional earnings taxed.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E3.7 |
Increase the taxable maximum by an additional 2 percent per year
beginning in 2022 until taxable earnings equal 90 percent of covered
earnings. Provide benefit credit for earnings up to the revised
taxable maximum. Create a new bend point equal to the current-law
taxable maximum with a 5 percent formula factor applying above the
new bend point.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E3.8 |
Beginning in 2028, apply 2 percent payroll tax rate on earnings over the
wage-indexed equivalent of $200,000 in 2017 (about $292,200 in 2028), with
the threshold wage-indexed after 2028. Provide proportional benefit credit
for additional earnings taxed, based on the payroll tax rate applied to
the additional earnings divided by the full 12.4 percent payroll tax rate.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E3.9 |
Beginning in 2028, apply 2 percent payroll tax rate on earnings over
the wage-indexed equivalent of $200,000 in 2017 (about $292,200 in 2028),
with the threshold wage-indexed after 2028. Do not provide benefit credit
for additional earnings taxed.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E3.10 |
Beginning in 2028, apply 2 percent payroll tax rate on earnings over
the wage-indexed equivalent of $300,000 in 2017 (about $438,600 in 2028),
with the threshold wage-indexed after 2028. Provide proportional benefit
credit for additional earnings taxed, based on the payroll tax rate applied
to the additional earnings divided by the full 12.4 percent payroll
tax rate.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E3.11 |
Beginning in 2028, apply 2 percent payroll tax rate on earnings over
the wage-indexed equivalent of $300,000 in 2017 (about $438,600 in 2028),
with the threshold wage-indexed after 2028. Do not provide benefit
credit for additional earnings taxed.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E3.12 |
Beginning in 2028, apply 2 percent payroll tax rate on earnings over
the wage-indexed equivalent of $400,000 in 2017 (about $584,700 in 2028),
with the threshold wage-indexed after 2028. Provide proportional benefit
credit for additional earnings taxed, based on the payroll tax rate
applied to the additional earnings divided by the full 12.4 percent
payroll tax rate.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E3.13 |
Beginning in 2028, apply 2 percent payroll tax rate on earnings over the
wage-indexed equivalent of $400,000 in 2017 (about $584,700 in 2028), with
the threshold wage-indexed after 2028. Do not provide benefit credit for
additional earnings taxed.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E3.14 |
Eliminate the taxable maximum for the employer payroll tax (6.2 percent)
beginning in 2021. For the employee payroll tax (6.2 percent) and for benefit
credit purposes, beginning in 2021, increase the taxable maximum by an
additional 2 percent per year until taxable earnings equal 90 percent of
covered earnings.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E3.15 |
Increase the taxable maximum such that 90 percent of earnings are subject
to the payroll tax (phased in 2021-2030). In addition, apply a tax rate of
6.2 percent for earnings above the revised taxable maximum (phased in from
2021-2030). Provide benefit credit for earnings taxed up to the revised
taxable maximum.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E3.16 |
Beginning in 2022, apply 4 percent payroll tax rate on earnings above
the wage-indexed equivalent of $400,000 in 2015 (about $495,900 in 2022),
with the threshold wage-indexed after 2022. Provide benefit credit for
additional earnings taxed, using a secondary PIA formula. This secondary
PIA formula involves: (1) an "AIME+" derived from annual earnings taxed
only between 2015 wage-indexed equivalents of $400,000 and $500,000, or
about $495,900 and $619,800 in 2022 (with thresholds wage-indexed after
2022); and (2) a formula factor of 2 percent on this newly computed "AIME+".
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E3.17 |
Beginning in 2022, increase the taxable maximum by twice the rate of
increase in the national Average Wage Index, but never by less than 3
percent. Provide benefit credit for earnings up to the revised taxable
maximum levels.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E3.18 |
Increase the taxable maximum linearly over 4 years to $238,200 for 2025.
After 2025, index the taxable maximum to AWI plus 0.5 percentage point.
Apply benefit credit on additional earnings taxed.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memoranda containing this or a similar provision: |
| E3.19 |
Increase the taxable maximum such that 90 percent of earnings would be subject
to the payroll tax (phased in linearly from 2022-2027). Provide benefit credit
for additional earnings taxed, using a secondary PIA formula. This secondary PIA
formula involves: (1) an "AIME+" derived from additional annual earnings taxed
over the current-law taxable maximum; and (2) a formula factor of 2.5 percent
on this newly computed "AIME+".
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |