A bipartisan coalition in the U.S. Senate is advancing legislation to eliminate the cap on earnings subject to Social Security payroll taxes, a move that would require high-income workers to contribute more to the program. The effort comes as the Old-Age and Survivors Insurance trust fund is projected to be depleted in the fourth quarter of 2032, according to the latest Social Security Board of Trustees report, after which only 78% of benefits would be payable.
Currently, earnings up to $184,500 in 2026 are subject to the 6.2% payroll tax for employees and employers each, with self-employed individuals paying the full 12.4%. Once a worker reaches that threshold, no further Social Security taxes are withheld for the year. This structure means that someone earning $184,500 and someone earning $1.2 billion—like Elon Musk, whose net worth surged after SpaceX's IPO in June 2026—owe the same maximum tax of $11,439 (or $22,878 if self-employed).
Economist Teresa Ghilarducci of the New School for Social Research told PolitiFact that the maximum contribution is identical for a worker earning $184,500 and the wealthiest individual in the country. She noted that high earners whose compensation comes from stock appreciation or capital gains may owe little to no Social Security tax, potentially less than a salaried worker at the cap.
Stephen Nuñez, director of stratification economics at the Roosevelt Institute, highlighted that in 1983, the payroll tax cap covered 90% of eligible earnings, a level assumed by reforms at the time. By 2000, that share had fallen to approximately 82.5%, where it has largely remained, reflecting the growing share of income earned above the cap.
Senators Bernie Moreno and Elizabeth Warren have introduced legislation to remove the cap entirely, framing it as a bipartisan solution to preserve Social Security for future generations. Separately, Senator Bernie Sanders has proposed the Social Security Expansion Act, co-sponsored by Warren and nine other Democrats, which would apply the payroll tax to earnings above $250,000 and increase the net investment income tax. Senator Sheldon Whitehouse's Medicare and Social Security Fair Share Act would set a $400,000 threshold that also includes investment income and close a loophole for wealthy pass-through business owners.
Opponents, including the Manhattan Institute, argue that eliminating the cap would affect upper-middle-class families, not just the ultra-wealthy, and could limit future tax options for Medicare. The Tax Foundation warns that uncapping without adjusting benefits would sever the link between taxes paid and benefits received, potentially transforming Social Security into a welfare program. Instead, the Tax Foundation suggests taxing fringe benefits like employer-sponsored health insurance, estimating that could raise $1.8 trillion over a decade with a smaller economic cost.
Financial advisors should monitor these developments closely, as changes to the payroll tax cap could significantly impact high-earning clients' retirement planning. For more context, see our coverage on advisors stress-testing plans and survey findings on public doubt about solvency.
