Social Security wage base and COLA announced for 2027

Individual taxable earnings of up to $192,300 annually will be subject to Social Security tax in 2027, the Social Security Administration (SSA) announced Wednesday.

The amount, an increase from $184,500 in 2026, is the wage base limit that applies to earnings subject to the 6.2% OASDI tax (old-age, survivors, and disability insurance). At or above the wage base limit, the employee and employer each will pay $11,922.60 in OASDI tax in 2027, up from $11,439 in 2026.

The Medicare hospital insurance tax of 1.45% each for employees and employers remains unchanged and has no wage limit. Individuals with earned income exceeding $200,000 ($250,000 for married taxpayers filing jointly and $125,000 for married taxpayers filing separately) continue to pay the additional 0.9% Medicare tax.

Self-employed individuals continue to pay self-employment tax equal to the combined employee and employer Social Security and Medicare tax rates.

COLA adjustments

The SSA also announced a 3.6% cost-of-living adjustment (COLA) for Social Security and Supplemental Security Income (SSI) benefits beginning in January 2027.

Nearly 72 million Social Security beneficiaries will receive the increase, and about 7.3 million SSI recipients will see increased payments beginning Dec. 31, 2026.

On average, Social Security retirement benefits will increase by $75 per month, from $2,095 to $2,170.

Beneficiaries younger than full retirement age can earn up to $25,560 in 2027 before benefits are reduced by $1 for every $2 of earnings above the limit, up from $24,480 in 2026.

Individuals reaching full retirement age in 2027 can earn up to $67,920 before benefits are reduced by $1 for every $3 of earnings above the limit for months before reaching full retirement age, up from $65,160 in 2026.

— To comment on this article or to suggest an idea for another article, contact Martha Waggoner at Martha.Waggoner@aicpa-cima.com.