## Provisions Affecting Payroll Taxes

- Office of the Chief Actuary
- Individual Provisions
-                 Current law Social Security and Medicare tax rates
-                 Current law contribution and benefit base

          These provisions modify: (1) the current-law OASDI payroll tax rate of 12.4          percent (6.2 percent each for employees and employers); or (2) the contribution          and benefit base (taxable maximum), which limits the amount of earnings subject          to payroll tax and credited for benefit computation.  We provide a          summary list of all options          (printer-friendly PDF version)          in this category.  For each provision listed below, we provide an          estimate of the financial effect on the OASDI program over          the long-range period (the next 75 years) and for the 75th year. In          addition, we provide graphs and detailed single year tables.          We base all estimates on the intermediate assumptions          described in the           2023 Trustees Report.         

          Choose the type of estimates (summary or detailed) from          the list of provisions.         
        -              E1: Increase payroll tax rate, with no changes in the taxable             maximum.
        -              E2: Tax all earnings above the current-law taxable maximum.
        -              E3: Tax a portion of earnings above the current-law taxable maximum.            

| Number | Table and graph selection                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| E1.1   | Increase the payroll tax rate (currently 12.4 percent) to 16.2        percent in 2024 and later.              Summary measures and graphs         (PDF version)       Detailed single year tables         (PDF version)       Memorandum containing this or a similar provision:- Social Security Advisory Board 2005                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| E1.2   | Increase the payroll tax rate (currently 12.4 percent) to 16.2 percent in        2034-2063, and to 20.0 percent in years 2064 and later.              Summary measures and graphs         (PDF version)       Detailed single year tables         (PDF version)       Memorandum containing this or a similar provision:- Social Security Advisory Board 2005                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| E1.4   | Increase the payroll tax rate (currently 12.4 percent) by 0.1 percentage point        each year from 2029-2048, until the rate reaches 14.4 percent in 2048 and later.              Summary measures and graphs         (PDF version)       Detailed single year tables         (PDF version)       Memoranda containing this or a similar provision:-  Larson 2014
- National Academy of Social Insurance 2009                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| E1.8   | Increase the payroll tax rate (currently 12.4 percent) by 0.1 percentage point        each year from 2026-2031, until the rate reaches 13.0 percent for 2031 and later.              Summary measures and graphs         (PDF version)       Detailed single year tables         (PDF version)       Memoranda containing this or a similar provision:- Moore 2023
- Moore 2022
- Moore 2019
- Moore 2013                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| E1.9   | Increase the payroll tax rate (currently 12.4 percent) by 0.1 percentage point        each year from 2027-2050, until the rate reaches 14.8 percent in 2050 and later.              Summary measures and graphs         (PDF version)       Detailed single year tables         (PDF version)       Memoranda containing this or a similar provision:- Larson, Blumenthal, Van Hollen September 2019
- Larson, Blumenthal, Van Hollen January 2019
- Larson 2017                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| E1.10  | Increase the payroll tax rate by 0.1 percentage point per year for 2025        through 2034 so that it equals 13.4 percent for 2034 and later. The increase        would be split evenly between the employer and employee share, and would        be split between OASI and DI in proportion to currently scheduled payroll        tax rates.              Summary measures and graphs         (PDF version)       Detailed single year tables         (PDF version)       Memoranda containing this or a similar provision:- Bipartisan Policy Center October 2016
- Bipartisan Policy Center June 2016                                                                                                                                                                                                                                                                                                                                                                                                  |
| E2.1   | Eliminate the taxable maximum in years 2024 and later, and apply full 12.4         percent payroll tax rate to all earnings. Do not provide benefit credit for         earnings above the current-law taxable maximum.              Summary measures and graphs         (PDF version)       Detailed single year tables         (PDF version)       Memoranda containing this or a similar provision:- DeFazio 2015
- Social Security Advisory Board 2005                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| E2.2   | Eliminate the taxable maximum in years 2024 and later, and apply full 12.4        percent payroll tax rate to all earnings. Provide benefit credit for earnings        above the current-law taxable maximum.              Summary measures and graphs         (PDF version)       Detailed single year tables         (PDF version)       Memorandum containing this or a similar provision:- Social Security Advisory Board 2005                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| E2.4   | Eliminate the taxable maximum for years 2030 and later (phased in 2024-2030),        and apply full 12.4 percent payroll tax rate to all earnings. Provide benefit        credit for earnings above the current-law taxable maximum that are subject to        the payroll tax, using a secondary PIA formula. This secondary PIA formula        involves: (1) an "AIME+" derived from annual earnings from each year after 2023        that were in excess of that year's current-law taxable maximum; (2) a new bend        point equal to $9,360 in 2024, indexed by wages after 2024; and (3) formula        factors of 3 percent and 0.25 percent below and above the new bend point,        respectively.              Summary measures and graphs         (PDF version)       Detailed single year tables         (PDF version)       Memoranda containing this or a similar provision:- Deutch, Hirono 2022
- Deutch, Hirono 2019
- Deutch, Hirono 2017
- Deutch 2015
- Deutch 2010            |
| E2.5   | Apply 12.4 percent payroll tax rate on earnings above $250,000 starting in 2024,        and tax all earnings once the current-law taxable maximum exceeds $250,000. Do        not provide benefit credit for additional earnings taxed.              Summary measures and graphs         (PDF version)       Detailed single year tables         (PDF version)       Memoranda containing this or a similar provision:- Sanders 2023
- Sanders, DeFazio 2022
- Sanders, DeFazio 2019
- Sanders, DeFazio 2017
- Sanders 2016
- Sanders 2015
- Sanders 2013
- DeFazio 2011                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| E2.11  | Eliminate the taxable maximum in years 2029 and later. Phase in elimination        by taxing all earnings above the current-law taxable maximum at: 2.48 percent        in 2025, 4.96 percent in 2026, and so on, up to 12.40 percent in 2029. Provide        benefit credit for earnings above the current-law taxable maximum that are        subject to the payroll tax, using a secondary PIA formula. This secondary PIA        formula involves: (1) an "AIME+" derived from annual earnings from each year        after 2024 that were in excess of that year's current-law taxable maximum;        and (2) a formula factor of 5 percent on this newly computed "AIME+".              Summary measures and graphs         (PDF version)       Detailed single year tables         (PDF version)       Memoranda containing this or a similar provision:- Sanchez 2016
- Schatz 2015
- Harkin 2013                                                                                               |
| E2.12  | Eliminate the taxable maximum in years 2035 and later. Phase in elimination         by taxing all earnings above the current-law taxable maximum at: 1.24 percent         in 2026, 2.48 percent in 2027, and so on, up to 12.40 percent in 2035. Provide         benefit credit for earnings above the current-law taxable maximum. Create a         new bend point at the current-law taxable maximum with a 3 percent formula         factor applying above the new bend point.              Summary measures and graphs         (PDF version)       Detailed single year tables         (PDF version)       Memoranda containing this or a similar provision:- Moore 2023
- Moore 2022
- Moore 2019
- Moore 2013                                                                                                                                                                                                                                                                                       |
| E2.13  | Apply OASDI 12.4 percent payroll tax rate on earnings above $400,000 starting         in 2025, and tax all earnings once the current-law taxable maximum exceeds $400,000.         Provide benefit credit for earnings above the current-law taxable maximum that         are subject to the payroll tax, using a secondary PIA formula. This secondary         PIA formula involves: (1) an "AIME+" derived from annual earnings from each year         after 2024 that were in excess of that year's current-law taxable maximum; and         (2) a formula factor of 2 percent on this newly computed "AIME+".              Summary measures and graphs         (PDF version)       Detailed single year tables         (PDF version)       Memoranda containing this or a similar provision:- Larson, Blumenthal, Van Hollen September 2019
- Larson, Blumenthal, Van Hollen January 2019
- Larson 2017
- Larson 2015
- Larson 2014                                                                  |
| E2.14  | Apply OASDI 12.4 percent payroll tax rate on earnings above $250,000 starting         in 2025, and tax all earnings once the current-law taxable maximum exceeds $250,000.         Provide benefit credit for earnings above the current-law taxable maximum that         are subject to the payroll tax, using a secondary PIA formula. This secondary         PIA formula involves: (1) an "AIME+" derived from annual earnings from each year         after 2024 that were in excess of that year's current-law taxable maximum; and         (2) a formula factor of 2 percent on this newly computed "AIME+".              Summary measures and graphs         (PDF version)       Detailed single year tables         (PDF version)       Memoranda containing this or a similar provision:- Lawson 2021
- Lawson 2017                                                                                                                                                                              |
| E2.15  | Apply OASDI 12.4 percent payroll tax rate on earnings above $300,000 starting in 2025,         and tax all earnings once the current-law taxable maximum exceeds $300,000. Provide benefit         credit for earnings above the current-law taxable maximum that are subject to the payroll         tax, using a secondary PIA formula. This secondary PIA formula involves: (1) an "AIME+"         derived from annual earnings from each year after 2024 that were in excess of that year's         current-law taxable maximum; and (2) a formula factor of 3 percent on this newly computed         "AIME+".              Summary measures and graphs         (PDF version)       Detailed single year tables         (PDF version)       Memorandum containing this or a similar provision:- Crist 2017                                                                                                                                                                                            |
| E2.16  | Apply OASDI 12.4 percent payroll tax rate on earnings above $250,000         starting in 2024, and tax all earnings once the current-law taxable         maximum exceeds $250,000. Increase the computed level of the SSA average         wage index for years after 2023 by amounts ranging from 0.6 percent         for 2024 to 0.9 percent for 2034 and later.  Provide benefit credit         for earnings above the current-law taxable maximum that are subject         to the payroll tax, using a secondary PIA formula. This secondary PIA         formula involves: (1) an "AIME+" derived from annual earnings from each         year after 2023 that were in excess of that year's current-law taxable         maximum; and (2) a formula factor of 2 percent on this newly computed "AIME+".              Summary measures and graphs         (PDF version)       Detailed single year tables         (PDF version)       Memorandum containing this or a similar provision:- Craig 2022 |
| E2.17  | Apply 12.4 percent payroll tax rate on earnings above $400,000 starting in         2024 and tax all earnings once the current-law taxable maximum exceeds $400,000.         Do not provide benefit credit for additional earnings taxed.              Summary measures and graphs         (PDF version)       Detailed single year tables         (PDF version)       Memorandum containing this or a similar provision:- Whitehouse, Boyle 2023                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| E2.18  | Apply the combined OASDI payroll tax rate on covered earnings above $400,000         paid in 2025 and later, and tax all covered earnings once the current-law taxable         maximum exceeds $400,000. Increase the computed level of the AWI for years         after 2024 by amounts ranging from 0.5 percent for 2025 to 0.9 percent for 2047         and later. Credit the additional earnings taxed for benefit purposes by: (a)         calculating a second average indexed monthly earnings ("AIME+") reflecting only         earnings taxed above the current-law taxable maximum, (b) applying a 1 percent         factor on this newly computed "AIME+" to develop a second component of the PIA,         and (c) adding this second component to the current-law PIA.              Summary measures and graphs         (PDF version)       Detailed single year tables         (PDF version)       Memorandum containing this or a similar provision:- Larson 2023                        |
| E3.1   | Increase the taxable maximum such that 90 percent of earnings would be subject to        the payroll tax (phased in 2024-2033). Provide benefit credit for earnings up to        the revised taxable maximum.              Summary measures and graphs         (PDF version)       Detailed single year tables         (PDF version)       Memorandum containing this or a similar provision:- Social Security Advisory Board 2005                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| E3.2   | Increase the taxable maximum such that 90 percent of earnings would be subject        to the payroll tax (phased in 2024-2033). Do not provide benefit credit for        additional earnings taxed.              Summary measures and graphs         (PDF version)       Detailed single year tables         (PDF version)       Memorandum containing this or a similar provision:- Liebman, MacGuineas, Samwick 2005                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| E3.5   | Increase the taxable maximum each year by an additional 2 percent beginning in        2024 until taxable earnings equal 90 percent of covered earnings. Provide benefit        credit for earnings up to the revised taxable maximum.              Summary measures and graphs         (PDF version)       Detailed single year tables         (PDF version)       Memoranda containing this or a similar provision:- Bipartisan Policy Center 2010
- National Academy of Social Insurance 2009                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| E3.6   | Increase the taxable maximum each year by an additional 2 percent beginning in         2026 until taxable earnings equal 90 percent of covered earnings. Do not provide         benefit credit for additional earnings taxed.              Summary measures and graphs         (PDF version)       Detailed single year tables         (PDF version)       Memorandum containing this or a similar provision:- National Research Council & National Academy of Public Administration 2010                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| E3.7   | Increase the taxable maximum by an additional 2 percent per year beginning in        2025 until taxable earnings equal 90 percent of covered earnings. Provide benefit        credit for earnings up to the revised taxable maximum. Create a new bend point        equal to the current-law taxable maximum with a 5 percent formula factor applying        above the new bend point.              Summary measures and graphs         (PDF version)       Detailed single year tables         (PDF version)       Memorandum containing this or a similar provision:- Fiscal Commission 2010                                                                                                                                                                                                                                                                                                                                                                                                             |
| E3.8   | Beginning in 2031, apply 2 percent payroll tax rate on earnings over the wage-indexed         equivalent of $200,000 in 2017 (about $348,300 in 2031), with the threshold wage-indexed         after 2031. Provide proportional benefit credit for additional earnings taxed, based         on the payroll tax rate applied to the additional earnings divided by the full 12.4         percent payroll tax rate.              Summary measures and graphs         (PDF version)       Detailed single year tables         (PDF version)       Memorandum containing this or a similar provision:- Johnson, Brady, Ryan 2010                                                                                                                                                                                                                                                                                                                                                                               |
| E3.9   | Beginning in 2031, apply 2 percent payroll tax rate on earnings over the wage-indexed        equivalent of $200,000 in 2017 (about $348,300 in 2031), with the threshold wage-indexed        after 2031. Do not provide benefit credit for additional earnings taxed.              Summary measures and graphs         (PDF version)       Detailed single year tables         (PDF version)       Memorandum containing this or a similar provision:- Johnson, Brady, Ryan 2010                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| E3.10  | Beginning in 2031, apply 2 percent payroll tax rate on earnings over the wage-indexed        equivalent of $300,000 in 2017 (about $522,300 in 2031), with the threshold wage-indexed        after 2031. Provide proportional benefit credit for additional earnings taxed, based        on the payroll tax rate applied to the additional earnings divided by the full 12.4        percent payroll tax rate.              Summary measures and graphs         (PDF version)       Detailed single year tables         (PDF version)       Memorandum containing this or a similar provision:- Johnson, Brady, Ryan 2010                                                                                                                                                                                                                                                                                                                                                                                   |
| E3.11  | Beginning in 2031, apply 2 percent payroll tax rate on earnings over the        wage-indexed equivalent of $300,000 in 2017 (about $522,300 in 2031), with        the threshold wage-indexed after 2031. Do not provide benefit credit for        additional earnings taxed.              Summary measures and graphs         (PDF version)       Detailed single year tables         (PDF version)       Memorandum containing this or a similar provision:- Johnson, Brady, Ryan 2010                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| E3.12  | Beginning in 2031, apply 2 percent payroll tax rate on earnings over the        wage-indexed equivalent of $400,000 in 2017 (about $696,600 in 2031), with        the threshold wage-indexed after 2031. Provide proportional benefit credit        for additional earnings taxed, based on the payroll tax rate applied to        the additional earnings divided by the full 12.4 percent payroll tax rate.              Summary measures and graphs         (PDF version)       Detailed single year tables         (PDF version)       Memorandum containing this or a similar provision:- Johnson, Brady, Ryan 2010                                                                                                                                                                                                                                                                                                                                                                                   |
| E3.13  | Beginning in 2031, apply 2 percent payroll tax rate on earnings over the        wage-indexed equivalent of $400,000 in 2017 (about $696,600 in 2031), with       the threshold wage-indexed after 2031. Do not provide benefit credit for        additional earnings taxed.              Summary measures and graphs         (PDF version)       Detailed single year tables         (PDF version)       Memorandum containing this or a similar provision:- Johnson, Brady, Ryan 2010                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| E3.14  | Eliminate the taxable maximum for the employer payroll tax (6.2 percent) beginning        in 2024. For the employee payroll tax (6.2 percent) and for benefit credit purposes,        beginning in 2024, increase the taxable maximum by an additional 2 percent per year        until taxable earnings equal 90 percent of covered earnings.              Summary measures and graphs         (PDF version)       Detailed single year tables         (PDF version)       Memorandum containing this or a similar provision:- National Academy of Social Insurance 2009                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| E3.15  | Increase the taxable maximum such that 90 percent of earnings are subject to        the payroll tax (phased in 2024-2033). In addition, apply a tax rate of 6.2        percent for earnings above the revised taxable maximum (phased in from 2024-2033).        Provide benefit credit for earnings taxed up to the revised taxable maximum.              Summary measures and graphs         (PDF version)       Detailed single year tables         (PDF version)       Memorandum containing this or a similar provision:- Senate Special Committee on Aging 2010                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| E3.16  | Beginning in 2025, apply 4 percent payroll tax rate on earnings above the        wage-indexed equivalent of $400,000 in 2015 (about $589,500 in 2025), with        the threshold wage-indexed after 2025. Provide benefit credit for additional        earnings taxed, using a secondary PIA formula. This secondary PIA formula        involves: (1) an "AIME+" derived from annual earnings taxed only between 2015        wage-indexed equivalents of $400,000 and $500,000, or about $589,500 and        $736,800 in 2025 (with thresholds wage-indexed after 2025); and (2) a formula        factor of 2 percent on this newly computed "AIME+".              Summary measures and graphs         (PDF version)       Detailed single year tables         (PDF version)       Memorandum containing this or a similar provision:- Begich, Murray 2014                                                                                                                                              |
| E3.17  | Beginning in 2025, increase the taxable maximum by twice the rate of increase        in the national Average Wage Index, but never by less than 3 percent. Provide        benefit credit for earnings up to the revised taxable maximum levels.               Summary measures and graphs         (PDF version)       Detailed single year tables         (PDF version)       Memorandum containing this or a similar provision:- Murphy 2016                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| E3.18  | Increase the taxable maximum linearly over 4 years to $279,900 for 2028. After 2028,        index the taxable maximum to AWI plus 0.5 percentage point. Apply benefit credit on        additional earnings taxed.              Summary measures and graphs         (PDF version)       Detailed single year tables         (PDF version)       Memoranda containing this or a similar provision:- Bipartisan Policy Center October 2016
- Bipartisan Policy Center June 2016                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| E3.19  | Increase the taxable maximum such that 90 percent of earnings would be subject        to the payroll tax (phased in linearly from 2025-2030). Provide benefit credit        for additional earnings taxed, using a secondary PIA formula. This secondary PIA        formula involves: (1) an "AIME+" derived from additional annual earnings taxed        over the current-law taxable maximum; and (2) a formula factor of 2.5 percent        on this newly computed "AIME+".              Summary measures and graphs         (PDF version)       Detailed single year tables         (PDF version)       Memorandum containing this or a similar provision:- Ribble 2016                                                                                                                                                                                                                                                                                                                               |
|        | Summary list of all options in this category                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |