--- title: Why Millionaires Don't Have to Pay Any More Social Security Taxes This Year description: Employees who make $1 million a year or more are done paying Social Security taxes for 2023 because an income cap threshold. authors: - name: Adam Hardy role: Lead Data Reporter url: https://money.com/author/adam-hardy/ bio: Adam Hardy is a lead data journalist at Money, where he frequently reports on financial barriers that affect low-income Americans. Adam’s work has also appeared in Business Insider, Forbes, Nasdaq, The Penny Hoarder, Yahoo! Finance and more than a dozen local and regional newspapers. education: University of South Florida, BA, Magazine Journalism at_money_since: 2021 articles: 499 covers: - Retirement - Banking - Business - Career Advice - Credit - Credit Cards - Debt - Economy and Politics - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Pets - Professional Services - Shopping - Taxes - Technology also_seen_in: - The Penny Hoarder - Forbes Advisor - Creative Loafing - The New York Times - The Washington Post - Bloomberg - Harvard Law School - The Federal Register - National Consumer Law Center - CBS News - Becker's Hospital Review - Business Insider - Mother Jones - The Week - Fortune - The Philadelphia Inquirer - National Association of Student Financial Aid Administrators (NAFSAA) - Education Advisory Board (EAB) - The Institute for College Access & Success (TICAS) - This Morning with Gordon Deal - Empower - Reddit social: - https://www.x.com/hardyjournalism - https://www.linkedin.com/in/hardyjournalism/ editors: - name: Brad Tuttle role: Senior Editor url: https://money.com/author/brad-tuttle/ bio: Brad Tuttle is a former senior editor at Money with over 10 years’ experience covering a vast number of personal finance topics, including careers, cars, travel, budgeting, investing, insurance, credit cards, consumer psychology, real estate, banking, and shopping and deals. education: Columbia University School of Journalism, MS at_money_since: 2014 articles: 366 covers: - Retirement - Banking - Business - Career Advice - Credit - Credit Cards - Economy and Politics - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Pets - Professional Services - Shopping - Taxes - Technology social: - https://twitter.com/bradrtuttle - https://linkedin.com/in/brad-tuttle-834b225 former_staff: true published: '2023-03-03T18:44:02.000Z' modified: '2024-01-10T13:28:19.000Z' section: Retirement tags: - News - Social Security - Taxes word_count: 611 canonical: https://money.com/millionaires-social-security-taxes-income-cap/ type: NewsArticle source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![regular person standing in-between a ripped social security card.](https://img.money.com/2023/03/News-Minionaires-stopped-Paying-social-security.jpg) As of this week, Americans earning $1,000,000 have already finished paying their share of Social Security taxes for the year, according to a new report. Any future paychecks for those million-dollar earners in 2023 won’t see deductions for Social Security. By contrast, the vast majority of employees must contribute to the social safety net program throughout the entire year. This scenario is due to a lesser-known provision called the Social Security tax cap. ## What the research says A [new analysis](https://cepr.net/wage-cap-allows-millionaires-to-stop-contributing-to-social-security-on-february-28-2023/) of the Social Security tax cap by the left-leaning Center for Economic and Policy Research highlights the fact that those who earn $1,000,000 salaries stopped paying Social Security payroll taxes on Feb. 28 this year. - The Social Security tax cap currently shields any income over $160,200 from the 6.2% payroll tax that is deducted from employees’ paychecks. The [tax cap provision](https://www.ssa.gov/oact/cola/cbb.html) has been a feature of the Social Security program since its inception. The cap changes each year. In 1937, shortly after Social Security was created, the cap was $3,000. Last year, it was $147,000 — and today, it is $160,200. - Once $160,200 has been earned for 2023, the employee no longer has Social Security taxes deducted from their paycheck. On Feb. 28, millionaire earners reached that limit. - The CEPR estimates that some 94% of employees will earn under $160,200 in 2023, so Social Security payroll taxes will be deducted throughout the entire year for the vast majority of workers in America. In other words, given the 2023 cap, the maximum amount of taxes an American can pay into Social Security is $9,932.40 for the year. Because the tax is deducted from employee paychecks — and because millionaires’ paychecks are much larger — they reach this limit much sooner than typical employees. - For example, an employee earning $950,000 reached their limit on Friday. And anyone making $500,000 a year will stop being taxed on April 27, according to CEPR’s tax-cap calculator. Those who earn above $160,200 still have to pay some payroll taxes on all of their income, however — 1.45% for [Medicare](https://money.com/what-is-medicare/) taxes, which does not have an income cap. And of course, their earnings are still subject to [federal income taxes](https://money.com/tax-brackets/) and state taxes, where applicable. ## Zoom out More than [66 million Americans](https://www.ssa.gov/policy/docs/quickfacts/stat_snapshot/index.html?qs) rely on [Social Security benefits](https://money.com/bigger-social-security-checks-schedule-2023/) each month. - Benefits are paid primarily to retirees, though the program also assists nearly 9 million people with disabilities and more than 3 million children. - The program is funded by employee payroll taxes — 6.2% for workers and 6.2% for employers. All income above $160,200 in 2023 is exempt. Recent [calculations](https://www.cbo.gov/publication/58564) from the nonpartisan Congressional Budget Office projected that Social Security tax coffers will run out of money by 2033 if Congress does not intervene. - When the funds are exhausted, benefits will still be paid out, though monthly checks would be slashed by about 25%, according to the CBO. An increasingly popular solution to Social Security’s looming financial crisis is to raise or eliminate the tax cap. - The CBO recently [estimated](https://www.cbo.gov/budget-options/58630#:~:text=The%20Congressional%20Budget%20Office%20projects,be%20subject%20to%20payroll%20taxes.) that if the tax cap were to be lifted to $250,000, it would push back Social Security’s insolvency date to 2046. - Some lawmakers want to eliminate the tax cap altogether. Last month, progressive Sens. Bernie Sanders, I-Vt., and Elizabeth Warren, D-Mass., introduced the “[Social Security Expansion Act](https://www.sanders.senate.gov/wp-content/uploads/SocialSecurityExpansionAct2023.pdf)” to get rid of the tax cap. 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