2027 Social Security Changes: What Business Owners and Employees Need to Know

Every fall, the Social Security Administration (SSA) updates its numbers for inflation. The 2027 changes take effect January 1. They affect higher earners’ paychecks, how employers set up payroll, and how much working retirees can earn before benefits are withheld. Here’s what’s changing and what to do before the new year.

The Quick Version

• Benefits rise 3.6% starting in January 2027.
• The Social Security wage base rises from $184,500 to $192,300.
• Tax rates stay the same. Employees and employers each still pay 7.65%. Self-employed people still pay 15.3%.
• Working retirees can earn more before any benefits are withheld.

For Employees: What Changes in Your Paycheck

Social Security tax of 6.2% comes out of your paycheck until your wages for the year reach the annual cap. In 2027 the cap is $192,300. Medicare tax of 1.45% applies to all of your wages, with no cap.

If you earn less than $192,300, nothing changes. You’ll keep paying the same 7.65% you pay today.

If you earn more than $184,500, you’ll pay Social Security tax on more of your pay than last year. The most you can owe rises from $11,439 to $11,922.60. If you’re used to a bigger paycheck late in the year after hitting the cap, that bump will come later, or not at all.

If you work more than one job, each employer withholds tax up to the cap on its own wages. Your total withholding can end up above the limit. You get the extra back as a credit when you file your tax return.

If you earn over $200,000, your employer must also withhold an extra 0.9% Additional Medicare Tax. Whether you actually owe it depends on your filing status:

• $250,000 if married filing jointly
• $125,000 if married filing separately
• $200,000 if single or head of household

If you’re married and both spouses work, you may owe more than your employers withhold. You can increase your withholding on Form W-4 to avoid a surprise bill at tax time.

Collecting Benefits While Still Working?

If you’re receiving Social Security before full retirement age and still working, part of your benefit may be withheld once your earnings pass a yearly limit:

Full retirement age is 66 if you were born from 1943 through 1954. It rises gradually to 67 for anyone born in 1960 or later. Withheld benefits aren’t lost for good. Social Security recalculates your benefit once you reach full retirement age to account for months it withheld.

For Small Business Owners: Payroll and Self-Employment

Update Payroll Before Your First 2027 Pay Date

The new cap applies based on the date wages are paid, not the date they’re earned. A December 2026 pay period paid in January 2027 counts toward the 2027 cap. Before you run that first payroll:

1. Enter the $192,300 wage base in your payroll software, or confirm your payroll provider has.
2. Make sure year-to-date Social Security and Medicare wages reset to zero.
3. Confirm your system starts withholding Additional Medicare Tax once an employee’s wages pass $200,000.
4. Let employees who earned over $184,500 in 2026 know their take-home pay may be lower later in 2027.

Your employer match rises too. For each employee at or above the cap, your share can be as much as $11,922.60, so build that into your 2027 budget.

Closing Out 2026

As you prepare 2026 Forms W-2, check each employee’s totals. Social Security wages (box 3) plus Social Security tips (box 7) shouldn’t exceed $184,500. Social Security tax withheld (box 4) shouldn’t exceed $11,439.

If You’re Self-Employed

Self-employment tax stays at 15.3%. That’s 12.4% for Social Security on net earnings up to $192,300, plus 2.9% for Medicare on all net earnings. If you also receive W-2 wages, those wages count toward the cap first. For example, if you’re paid $150,000 in wages in 2027, the 12.4% Social Security portion applies to no more than $42,300 of your self-employment income. Now is a good time to update your 2027 estimated tax payments.

2027 at a Glance

Get Ready for 2027 with Acuity

The Acuity team can help you update payroll for the new year, adjust your estimated tax payments, or review your income before January. Contact us at info@acuitycpas.com to get started.