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2018 Payroll Tax Cap Will Nudge Slightly Higher

The maximum amount of earnings subject to the Social Security payroll tax in 2018 is $128,700 up by $1,500 from the $127,200 maximum for 2017, the Social Security Administration (SSA) announced on Oct. 13.

Of the estimated 175 million workers who will pay Social Security taxes in 2018, about 12 million will pay more because of the increase in the "taxable-maximum amount," beginning on Jan. 1, 2018.

The adjustment in the taxable-earnings cap is based on the government's estimate of recent inflation-adjusted wage growth. The 2018 jump of just over 1.1 percent is smaller than the 7.3 percent increase that took effect at the start of 2017, which was especially large because federal law kept the taxable maximum unchanged for 2016 due to a lack of cost-of-living increase in Social Security benefits.

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