The maximum earnings subject to the Social Security* payroll tax will increase by $8,700 in 2017 to $127,200 —up from $118,500. The Jan 1 adjustment is based on the government’s estimate of real wage growth. The 2017 increase in the taxable-earnings cap is the largest one-year increase since 1983.

Monthly Social Security benefits will increase a mere 0.3 percent in 2017. The Social Security Act ties the annual cost-of-living adjustment (COLA) to increases in the Consumer Price Index, as determined by the DOL’s Bureau of Labor Statistics.

Do you see the irony in these increases? Shouldn’t the adjustments be similar? Also, on one hand the payroll tax hike will increase the costs of goods and services, on the other the people won’t have enough to pay for the increase in goods and services.

*Social Security is financed by a 12.4 percent tax on wages up to the taxable-earnings cap, with half (6.2 percent) paid by workers and the other half paid by employers. The Medicare payroll tax rate is a matching 1.45 percent on all earnings.


Employee Benefit Advisors provides employee benefits. We are a broker helping companies with their Health & Welfare Benefits. We also help companies revaluate PEO Services, deciding if a PEO is a good choice and if so selecting and implementing the PEO.