Nobody likes paying taxes, and that's why many have looked forward to the lower tax rates that last year's tax reform efforts provided. Yet even for those who get some tax relief on their income, a potential rise in the amount of tax they pay toward eventually getting Social Security benefits could offset some of their savings elsewhere.

Not everyone will face a Social Security payroll tax increase. But with most recent estimates putting the number of affected taxpayers at roughly 10.5 million, you'll want to look closely to see if you'll be one of the unlucky few stuck with paying $279 or more in additional Social Security taxes during 2019.

Two Social Security cards resting on top of a $100 bill.

Image source: Getty Images.

How Social Security payroll taxes work

The federal government collects a Social Security payroll tax for use in paying benefits. Nearly every American worker pays payroll taxes, with only some state and local government workers having money directed into an alternative pension plan instead.

The amount of the payroll tax is 6.2% of wages. Employers also add another 6.2% on your behalf, adding up to 12.4%. If you're self-employed, then you'll have to cover the full 12.4% total yourself.

Because the payroll tax rate is a flat percentage, your taxes rise in line with your earnings. However, every year, there's a maximum level of earnings on which the government charges tax. That tends to go up in line with inflation each year, and the Social Security Administration recently announced that this amount, also called the Social Security wage base, will rise to $132,900. That's $4,500 greater than its 2018 counterpart, which is one of the biggest boosts seen in recent years.

Year

Social Security Wage Base

2011

$106,800

2012

$110,100

2013

$113,700

2014

$117,000

2015

$118,500

2016

$118,500

2017

$127,200

2018

$128,400

2019

$132,900

Data source: Social Security Administration.

How much the maximum Social Security tax is rising

If you're an employee, then paying 6.2% on $132,900 means that your taxes will amount to $8,239.80. Last year, the maximum tax amount for employees was $7,960.80. The difference is $279, and that's the amount of the increase that those making more than $132,900 in 2019 will face in the coming year.

Your employer will potentially face the same $279 tax hike that you do. Self-employed workers will get the worst news, because they'll be responsible for the full amount, paying a total of $558 in additional Social Security taxes.

Bad news for 10.5 million Americans

Most workers won't have to deal with this potential tax increase, because their earnings will fall well short of the $132,900 maximum limit. Because the 6.2% rate is staying the same, those who get wages and salaries below the limit won't result in any tax changes.

As of the most recent data available, though, about 10.5 million workers have earned enough to pay the maximum amount of Social Security payroll tax. That number has fluctuated from year to year, but typically, somewhere around 10 million to 11 million taxpayers could face the tax hike.  Among those self-employed workers having to pay a double-sized tax increase, the latest totals point to about 770,000 people who work for themselves having to pay the extra $558.

Some people will see a tax increase of less than the maximum amount. For instance, if your wages are somewhere between $128,400 and $131,900, then you'll only pay the 6.2% tax on the extra amount above $128,400. Nevertheless, having to pay anything more takes away some of the benefit of having a higher salary.

Staying on the rise

It's typical for the Social Security wage base to rise each year, and the bulk of taxpayers don't have to worry about its impact on Social Security payroll taxes. But for those in the upper end of the income spectrum, 2019's larger tax increase is just the latest in a series of gradual yet significant hikes over time.

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