Provisions Affecting Payroll Taxes
These provisions modify: (1) the current-law OASDI payroll tax rate of 12.4 percent (6.2 percent each for employees and employers); or (2) the contribution and benefit base (taxable maximum), which limits the amount of earnings subject to payroll tax and credited for benefit computation. We provide a summary list of all options (printer-friendly PDF version) in this category. For each provision listed below, we provide an estimate of the financial effect on the OASDI program over the long-range period (the next 75 years) and for the 75th year. In addition, we provide graphs and detailed single year tables. We base all estimates on the intermediate assumptions described in the 2019 Trustees Report.
Choose the type of estimates (summary or detailed) from the list of provisions.
We group these provisions as follows:| Number | Table and graph selection |
|---|---|
| E1.1 |
Increase the payroll tax rate (currently 12.4 percent) to 15.4 percent in
2020 and later.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E1.2 |
Increase the payroll tax rate (currently 12.4 percent) to 15.4
percent in 2032-2061, and to 18.4 percent in years 2062 and later.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E1.4 |
Increase the payroll tax rate (currently 12.4 percent) by 0.1 percentage
point each year from 2025-2044, until the rate reaches 14.4 percent in 2044
and later.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memoranda containing this or a similar provision: |
| E1.8 |
Increase the payroll tax rate (currently 12.4 percent) by 0.1 percentage
point each year from 2022-2027, until the rate reaches 13.0 percent for
2027 and later.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E1.9 |
Increase the payroll tax rate (currently 12.4 percent) by 0.1 percentage
point each year from 2023-2046, until the rate reaches 14.8 percent in 2046.
Then increase the payroll tax rate an additional 0.1 percentage point in
each year from 2085-2089, until the rate reaches 15.3 percent for 2089 and
later.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memoranda containing this or a similar provision: |
| E1.10 |
Increase the payroll tax rate by 0.1 percentage point per year for 2021
through 2030 so that it equals 13.4 percent for 2030 and later. The increase
would be split evenly between the employer and employee share, and would
be split between OASI and DI in proportion to currently scheduled payroll
tax rates.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memoranda containing this or a similar provision: |
| E2.1 |
Eliminate the taxable maximum in years 2020 and later, and apply full 12.4
percent payroll tax rate to all earnings. Do not provide benefit credit for
earnings above the current-law taxable maximum.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memoranda containing this or a similar provision: |
| E2.2 |
Eliminate the taxable maximum in years 2020 and later, and apply full
12.4 percent payroll tax rate to all earnings. Provide benefit credit
for earnings above the current-law taxable maximum.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E2.3 |
Eliminate the taxable maximum in years 2020 and later, and apply full 12.4
percent payroll tax rate to all earnings. Provide benefit credit for earnings
above the current-law taxable maximum. Create a new bend point at the current-law
taxable maximum with a 3 percent formula factor applying above the new bend point.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E2.4 |
Eliminate the taxable maximum for years 2026 and later (phased in
2020-2026), and apply full 12.4 percent payroll tax rate to all earnings.
Provide benefit credit for earnings above the current-law taxable
maximum that are subject to the payroll tax, using a secondary PIA
formula. This secondary PIA formula involves: (1) an "AIME+" derived
from annual earnings from each year after 2019 that were in excess
of that year's current-law taxable maximum; (2) a new bend point equal
to 134 percent of the monthly current-law taxable maximum; and (3)
formula factors of 3 percent and 0.25 percent below and above the
new bend point, respectively.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memoranda containing this or a similar provision: |
| E2.5 |
Apply 12.4 percent payroll tax rate on earnings above $250,000 starting
in 2020, and tax all earnings once the current-law taxable maximum exceeds
$250,000. Do not provide benefit credit for additional earnings taxed.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memoranda containing this or a similar provision: |
| E2.6 |
Apply a 3 percent payroll tax on earnings above the current-law
taxable maximum starting in 2020. Do not provide benefit credit
for earnings above the current-law taxable maximum.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E2.8 |
Apply a 2 percent payroll tax on earnings above the current-law
taxable maximum for years 2022-2069, and a 3 percent rate for years
2070 and later. Do not provide benefit credit for earnings above
the current-law taxable maximum.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E2.11 |
Eliminate the taxable maximum in years 2025 and later. Phase in
elimination by taxing all earnings above the current-law taxable
maximum at: 2.48 percent in 2021, 4.96 percent in 2022, and so on,
up to 12.40 percent in 2025. Provide benefit credit for earnings
above the current-law taxable maximum that are subject to the payroll
tax, using a secondary PIA formula. This secondary PIA formula involves:
(1) an "AIME+" derived from annual earnings from each year after
2020 that were in excess of that year's current-law taxable maximum;
and (2) a formula factor of 5 percent on this newly computed "AIME+".
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memoranda containing this or a similar provision: |
| E2.12 |
Eliminate the taxable maximum in years 2031 and later. Phase in elimination
by taxing all earnings above the current-law taxable maximum at: 1.24 percent
in 2022, 2.48 percent in 2023, and so on, up to 12.40 percent in 2031. Provide
benefit credit for earnings above the current-law taxable maximum. Create a
new bend point at the current-law taxable maximum with a 3 percent formula
factor applying above the new bend point.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E2.13 |
Apply OASDI 12.4 percent payroll tax rate on earnings above $400,000
starting in 2021, and tax all earnings once the current-law taxable
maximum exceeds $400,000. Provide benefit credit for earnings above
the current-law taxable maximum that are subject to the payroll tax,
using a secondary PIA formula. This secondary PIA formula involves:
(1) an "AIME+" derived from annual earnings from each year after 2020
that were in excess of that year's current-law taxable maximum; and
(2) a formula factor of 2 percent on this newly computed "AIME+".
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memoranda containing this or a similar provision: |
| E2.14 |
Apply OASDI 12.4 percent payroll tax rate on earnings above $250,000
starting in 2021, and tax all earnings once the current-law taxable
maximum exceeds $250,000. Provide benefit credit for earnings above
the current-law taxable maximum that are subject to the payroll tax,
using a secondary PIA formula. This secondary PIA formula involves:
(1) an "AIME+" derived from annual earnings from each year after 2020
that were in excess of that year's current-law taxable maximum; and
(2) a formula factor of 2 percent on this newly computed "AIME+".
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E2.15 |
Apply OASDI 12.4 percent payroll tax rate on earnings above $300,000
starting in 2021, and tax all earnings once the current-law taxable
maximum exceeds $300,000. Provide benefit credit for earnings above
the current-law taxable maximum that are subject to the payroll tax,
using a secondary PIA formula. This secondary PIA formula involves:
(1) an "AIME+" derived from annual earnings from each year after 2020
that were in excess of that year's current-law taxable maximum; and
(2) a formula factor of 3 percent on this newly computed "AIME+".
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E3.1 |
Increase the taxable maximum such that 90 percent of earnings
would be subject to the payroll tax (phased in 2020-2029). Provide
benefit credit for earnings up to the revised taxable maximum.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E3.2 |
Increase the taxable maximum such that 90 percent of earnings would
be subject to the payroll tax (phased in 2020-2029). Do not provide
benefit credit for additional earnings taxed.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E3.5 |
Increase the taxable maximum each year by an additional 2 percent
beginning in 2020 until taxable earnings equal 90 percent of covered
earnings. Provide benefit credit for earnings up to the revised
taxable maximum.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memoranda containing this or a similar provision: |
| E3.6 |
Increase the taxable maximum each year by an additional 2 percent
beginning in 2022 until taxable earnings equal 90 percent of covered
earnings. Do not provide benefit credit for additional earnings taxed.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E3.7 |
Increase the taxable maximum by an additional 2 percent per year
beginning in 2021 until taxable earnings equal 90 percent of covered
earnings. Provide benefit credit for earnings up to the revised
taxable maximum. Create a new bend point equal to the current-law
taxable maximum with a 5 percent formula factor applying above the
new bend point.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E3.8 |
Beginning in 2027, apply 2 percent payroll tax rate on earnings
over the wage-indexed equivalent of $200,000 in 2017 (about $288,600
in 2027), with the threshold wage-indexed after 2027. Provide proportional
benefit credit for additional earnings taxed, based on the payroll
tax rate applied to the additional earnings divided by the full
12.4 percent payroll tax rate.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E3.9 |
Beginning in 2027, apply 2 percent payroll tax rate on earnings
over the wage-indexed equivalent of $200,000 in 2017 (about $288,600
in 2027), with the threshold wage-indexed after 2027. Do not provide
benefit credit for additional earnings taxed.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E3.10 |
Beginning in 2027, apply 2 percent payroll tax rate on earnings over
the wage-indexed equivalent of $300,000 in 2017 (about $432,600 in 2027),
with the threshold wage-indexed after 2027. Provide proportional benefit
credit for additional earnings taxed, based on the payroll tax rate
applied to the additional earnings divided by the full 12.4 percent
payroll tax rate.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E3.11 |
Beginning in 2027, apply 2 percent payroll tax rate on earnings
over the wage-indexed equivalent of $300,000 in 2017 (about $432,600
in 2027), with the threshold wage-indexed after 2027. Do not provide
benefit credit for additional earnings taxed.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E3.12 |
Beginning in 2027, apply 2 percent payroll tax rate on earnings
over the wage-indexed equivalent of $400,000 in 2017 (about $576,900
in 2027), with the threshold wage-indexed after 2027. Provide
proportional benefit credit for additional earnings taxed, based
on the payroll tax rate applied to the additional earnings divided
by the full 12.4 percent payroll tax rate.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E3.13 |
Beginning in 2027, apply 2 percent payroll tax rate on earnings
over the wage-indexed equivalent of $400,000 in 2017 (about $576,900
in 2027), with the threshold wage-indexed after 2027. Do not provide
benefit credit for additional earnings taxed.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E3.14 |
Eliminate the taxable maximum for the employer payroll tax
(6.2 percent) beginning in 2020. For the employee payroll tax
(6.2 percent) and for benefit credit purposes, beginning in
2020, increase the taxable maximum by an additional 2 percent
per year until taxable earnings equal 90 percent of covered
earnings.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E3.15 |
Increase the taxable maximum such that 90 percent of earnings are
subject to the payroll tax (phased in 2020-2029). In addition, apply
a tax rate of 6.2 percent for earnings above the revised taxable
maximum (phased in from 2020-2029). Provide benefit credit for earnings
taxed up to the revised taxable maximum.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E3.16 |
Beginning in 2021, apply 4 percent payroll tax rate on earnings
above the wage-indexed equivalent of $400,000 in 2015 (about $480,000
in 2021), with the threshold wage-indexed after 2021. Provide benefit
credit for additional earnings taxed, using a secondary PIA formula.
This secondary PIA formula involves: (1) an "AIME+" derived from
annual earnings taxed only between 2015 wage-indexed equivalents
of $400,000 and $500,000, or about $480,000 and $600,000 in 2021
(with thresholds wage-indexed after 2021); and (2) a formula factor
of 2 percent on this newly computed "AIME+".
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E3.17 |
Beginning in 2021, increase the taxable maximum by twice the rate
of increase in the national Average Wage Index, but never by less
than 3 percent. Provide benefit credit for earnings up to the revised
taxable maximum levels.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| E3.18 |
Increase the taxable maximum linearly over 4 years to $232,200 for
2024. After 2024, index the taxable maximum to AWI plus 0.5 percentage
point. Apply benefit credit on additional earnings taxed.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memoranda containing this or a similar provision: |
| E3.19 |
Increase the taxable maximum such that 90 percent of earnings would
be subject to the payroll tax (phased in linearly from 2021-2026).
Provide benefit credit for additional earnings taxed, using a secondary
PIA formula. This secondary PIA formula involves: (1) an "AIME+" derived
from additional annual earnings taxed over the current-law taxable
maximum; and (2) a formula factor of 2.5 percent on this newly computed
"AIME+".
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |