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What eliminating the Social Security tax cap means
Warren and Moreno want high earners to pay Social Security taxes on all their wages. Here's what that would cost them and whether it would actually save the program.
In brief
Warren and Moreno want high earners to pay Social Security taxes on all their wages. Here's what that would cost them and whether it would actually save the program. Eliminating the Social Security tax cap would require high earners to pay more in taxes but wouldn't fully solve the program's funding crisis on its own…
Social Security faces a deadline
Without major changes, the Social Security trust fund could run out of money by 2032, triggering a 22% benefit cut across the board.
Two senators propose a solution
Elizabeth Warren and Bernie Moreno are calling for eliminating the Social Security payroll tax cap, which would require high earners to pay taxes on all their wages.
How the current tax cap works
For 2026, Social Security taxes apply only to the first $184,500 of wages. Employees pay 6.2% and employers pay another 6.2%, but earnings above that cap are untaxed.
The cap also limits future benefits
Social Security calculates your benefit based on your earnings history, but only counts income up to the tax cap. High earners can't increase their benefits beyond what the capped earnings allow.
What eliminating the cap would do
All wages would become subject to the 6.2% Social Security tax. A worker earning $1 million would pay an additional $50,561 per year in employee taxes, with employers owing the same amount.
The fairness argument
Moreno argues that high earners should contribute the same percentage of their income as factory workers and teachers. Warren says the change would affect only the top 6% of households.
“The wealthiest Americans, who have benefited the most from America's opportunities, should contribute the same percentage of their income as a factory worker in Chillicothe, Ohio, or a teacher in Worcester, Mass.”
Revenue estimates vary widely
The Tax Policy Center estimates the change would bring in $2.5 trillion over 10 years. The Tax Foundation estimates $3.2 trillion, but only $1.5 trillion after accounting for economic responses.
The benefits question matters
If high earners don't get extra benefits from paying more taxes, eliminating the cap would close 67% of Social Security's funding gap. If they do get higher benefits, it closes only 48%.
Impact on a $200,000 salary
Someone earning $200,000 would pay about $961 more per year in Social Security taxes under the proposal.
Impact on a $500,000 salary
A worker earning $500,000 would pay approximately $19,561 more per year in Social Security taxes.
Capital gains aren't affected
The proposal only applies to wages, not investment income like capital gains and dividends. Two people with the same total income could see different impacts depending on their income sources.
It's not a complete fix
Even with the tax cap eliminated, the change alone wouldn't fully solve Social Security's long-term funding problems. Congress may need to pursue additional measures.
Other proposals are also on the table
Congress is considering alternatives like a flat-rate Social Security cost-of-living adjustment or a new tax on net investment income above $400,000.
The 2027 tax limit coming soon
The Social Security Administration will announce the 2027 tax limit in mid-October. That number will determine how much of workers' wages are subject to the 6.2% tax next year.
Here's the gist
Eliminating the Social Security tax cap would require high earners to pay more in taxes but wouldn't fully solve the program's funding crisis on its own.
