$147,000 – Limit on wages subject to Social Security payroll taxes in 2022 (increased annually for inflation). Proposals to address the Social Security funding shortfall include eliminating the wage cap or maintaining the cap and then reinstating the tax at higher income levels. Proposals differ as to whether benefits would be increased commensurate with higher taxable wages.
According to the 2021 Social Security Trustees Report, the reserves that help fund Social Security retirement and disability benefits will be depleted in 2034, one year earlier than last year’s projection due to the pandemic. At that time, the program will be able to pay only 78% of scheduled benefits. Numerous bills have been introduced to address the shortfall, but lawmakers have stalled because potential fixes require increased taxes and/or benefit reductions. The chart below shows the estimated percentage of the 75-year Social Security funding gap that would be closed by some proposed changes.
Source: Social Security Administration, December 13, 2021
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