Millions Will Not Pay into Social Security by 2026
Pop the Champagne (good): As of Monday, millionaires are officially paying less in taxes than the rest of us.
In 2026, March 9 is the day when workers who earn $1 million stop contributing to Social Security annually. The shutdown comes despite the well-documented solvency crisis facing the nation’s bedrock safety-net program. Many economists say Social Security’s fragile finances could be more sustainable if the wealthiest Americans kicked in more.
As it stands, however, “those who can afford to overpay tend to stop doing so,” Hayley Brown, a labor and disability researcher at the left-leaning Center for Economic and Policy Research, wrote in an analysis published Friday.
This happens because Social Security is not collected on every dollar an employee earns. Social Security is funded by a 12.4% payroll tax. Part comes from employees who pay their 6.2% throughout the year from their salary or wages, and the other part is 6.2% matching by the employer.
But the US government collects these taxes only up to the “maximum tax rate,” an amount indexed to the national average income index that is adjusted annually. In 2026, the maximum taxable amount is $184,500. Once a worker earns that amount, they stop contributing to Social Security until the clock resets the following January.
In terms of absolute dollars, high earners pay less in Social Security taxes. In fact, their required maximum tax of $11,439 ($184,500 times 6.2%) is more than the contributions paid by nearly 94% of workers earning less than $184,500.
Billionaires and billionaires do, however, pay less as a share of their net worth.
This is important because due to demographic changes – a wave of baby boomers, longer lives and a shrinking workforce – the amount of money the government takes in from taxes paid to fund Social Security is not enough to cover the benefits it pays out to nearly 70 million beneficiaries each month.
For the past 15 years, the Social Security Administration has been supplementing that tax money with money taken from two trust funds, which will expire in 2032, according to the latest figures from the Congressional Budget Office. If lawmakers don’t step in, that will cause immediate benefits cuts.
What’s fueling the debate about the Social Security payroll tax cap?
One of the most frequently proposed solutions to mitigate the coming Social Security budget cuts is for the US to raise or eliminate the payroll tax cap.
Eliminating the payroll tax cap would more than halve the deficit without any other changes or reductions in benefits, according to one estimate. Even raising the cap to $250,000 will prevent insolvency for several more years.
The tax cap provision is not new; in fact, it has been around as long as Social Security has. But over the years, the share of top earners’ income that is not subject to income tax has been rising.
In 1983, only 10% of income exceeded the cap. By 2024, it has increased to more than 17%.
Growing income inequality between managers and rank-and-file workers is a powerful concern economists and researchers have been tracking for decades. According to CEPR’s Brown, there are few criminals.
“Decreasing union density has been accompanied by ballooning CEO pay, and both of these contribute significantly to the wage inequality we’re seeing,” he says. Other long-term changes include deregulation, changes in antitrust laws and looser corporate governance.
Compared to the 1980s, high earners today not only earn more but also get to keep more, because much of that income is above the maximum tax rate, Brown said.
What is the result? “The burden of supporting Social Security falls heavily on those who make less money,” he wrote.
More from Mali:
White House Plans to End Social Security Payments with Paper Checks
The Social Security Trust Fund Will Run Out of Money in 2032, a Year Sooner Than Expected
Now That Trump’s ‘Big, Good’ Bill Is Law, Here Are Big Tax Changes
