Million dollar earners stop paying into Social Security in 2026

In 2026, up to $184,500 of earnings will be subject to Social Security payroll taxes.

As of Monday, individuals with annual wage and salary income of $1 million stopped paying into the program this year, according to the Center for Economic Policy Research.

Wealthy people stop paying for programs even faster. Billionaire tech mogul Elon Musk may have paid all of his Social Security taxes for the year on New Year’s Day, depending on how his income is taxed, labor economist Teresa Ghilarducci estimated.

Together, Social Security and Medicare payroll taxes are known as FICA, after the Federal Insurance Contributions Act.

Workers and employers each pay 6.2% of their wages in social security through payroll taxes. Each also contributes 1.45% to Medicare. Unlike Social Security, Medicare taxes apply to all income with no income limits. There’s also a 0.9% Medicare surcharge for high-income earners.

Self-employed workers receive the full 12.4% for Social Security and 2.9% for Medicare, but they can also claim a deduction above the half-FICA tax limit.

Amid calls for higher taxes on the wealthy and a looming shortage of Social Security funding, some advocates and lawmakers are pushing to raise the cap on payroll taxes so high earners can pay more into the program.

Haley Brown, a labor and disability researcher at the Center for Economic Policy Research, a left-leaning think tank, said Social Security may not be able to pay out benefits on time in the future.

“On the other hand, there are people who can pay into the system year-round, but they quit before the end of three months of the year,” Brown said.

The Social Security Administration is currently facing the impending depletion of the trust funds it uses to help make monthly payments to millions of beneficiaries.

But the benefits will never disappear completely because money will continue to flow into the program through payroll taxes. Rather, the trust fund on which the system relies for retirement payments could be depleted in 2032, according to the latest projections from the Social Security Administration’s actuaries, and monthly payments would be cut by 24% unless Congress takes action to address the shortfall.

Raising the Social Security payroll tax cap is one option lawmakers may consider.

Research shows that choice is popular among consumers. Raising the payroll tax cap on incomes above $400,000 but not increasing benefits for additional contributions was the most popular of all policy options, according to a 2025 study by the National Academy of Social Insurance, AARP, National Institute for Retirement Security, and the U.S. Chamber of Commerce. The group, which is comprised of retirement policy and business organizations, surveyed 2,243 Americans.

Other popular options found in the study were gradually increasing the payroll tax rate from 6.2% to 7.2% and keeping the full retirement age at 67.

Income inequality is contributing to Social Security’s current trust funding shortfall, according to a recent study by the Roosevelt Institute, a liberal think tank, Student Network, and nonprofit partner of the Franklin D. Roosevelt Presidential Library and Museum.

According to the Roosevelt Institute, the percentage of income subject to Social Security payroll taxes was 90% in 1983. But payroll taxes weren’t increasing fast enough to maintain 90% of that. According to a study by the Roosevelt Institute, in 2000 that percentage was approximately 82.5%, and although there has been some fluctuation since then, it has remained roughly at that level.

About 6% of workers earn more than the cap, and that proportion remains stable. But real incomes for these workers grew by an “unexpectedly large” average of 62% from 1983 to 2000, according to the Roosevelt Institute. Meanwhile, the average real income of the remaining 94% of workers who earn below the cap has increased by only 17% over the years.

Raising the cap on payroll taxes will not solve Social Security’s funding problem.

According to the Social Security Administration, 67% of long-term actuarial balances will be fixed by eliminating tax caps and eliminating benefit deductions for tax payments over income thresholds starting this year. Other variations of this change may be less significant, depending on factors such as taxable income thresholds, such as $250,000 or $400,000 or more, and whether those contributions increase benefit payments.

If the payroll tax cap had been eliminated years ago, the results would have been even more likely to strengthen the program, Jason Fichtner, former deputy commissioner of the Social Security Administration and current executive director of the LIMRA Alliance for Lifetime Income, said during a March 3 panel discussion at the National Institute for Retirement Security Annual Retirement Policy Conference in Washington, D.C.

“If we had raised the tax cap and eliminated that cap, just one policy…15 years ago, we would have fallen into 75 years of solvency,” Fichtner said. “We’ve lost that one big option.”

Not everyone agrees with eliminating the Social Security payroll tax cap. According to the Manhattan Institute, a conservative think tank, this increase will affect not only the wealthy, but also upper-middle-class individuals and families. It would also limit the ability to raise taxes to pay for other initiatives, such as Medicare, which also faces funding shortfalls, the report found.

But other experts and voters say this reform is at the top of their wish list for Social Security reform.

“This seems like the fairest and easiest way to shore up Social Security’s finances, and it speaks to Social Security’s status as a Social Security program,” Brown said.

CEPR’s website includes a calculator for individuals to determine when to stop paying into the program this year based on their income.

“We hope that people don’t just use this tool to figure out when to stop depositing money, but try to see what it feels like for someone making $200,000, $300,000 and try to reconcile that with their idea of ​​what a fair system looks like,” Brown said.