The payroll tax that finances Social Security requires workers to pay 6.2% of their earnings up to a cap of $160,200 for this year. Employers pay another 6.2%. Sarah Rawlins of the left-leaning Center for Economic and Policy Research notes that the cap means that anyone earning $1 million this year is done contributing to Social Security as of today.
“When the payroll tax cap was implemented in 1983 only 10 percent of earnings exceeded it and went untaxed,” Rawlins writes. “But by 2021, the share of earnings above the cap had grown to 18.6 percent. Continued upward income redistribution has shifted more earnings out of range of the program’s supporting tax.”
You can play with CEPR’s Social Security tax calculator here.