January 18, 2022

Social Security: what are maximum taxable incomes and what are they for 2022?

During the time you work, there is a limit on the amount of your earnings that can be taxed by Social Security. This amount is known as the maximum taxable income, and it changes every year.

To see: Which Social Security recipients will get an extra $200 in January?
Find: Social Security Benefits 2022 – How Medicare Will Significantly Affect Those Who Earn Less

For 2022, this amount will be $147,000. This means that the Social Security Administration will tax up to the first $147,000 of your earnings this year. If you earn more, you don’t have to pay Social Security taxes on the extra income.

One of the reasons for this is that there is a maximum amount that can be deposited into the system, just as there is a maximum amount that can be withdrawn. The maximum Social Security benefit for this year is about $4,100. The cap is set to prevent the richest people who pay into the system from draining the system just as much as it is their turn to receive benefits. There is also the argument that those with significantly high incomes are not those most in need of income from Social Security benefits.

To see: How to maximize your Social Security benefits in 2022?
Find: Social Security Claims – 35% of retirees would apply online if answers to questions were readily available

The maximum taxable income changes every year and is adjusted for inflation, among other things. Below are the changes made in recent years.

Year Quantity
2015 $118,500
2016 $118,500
2017 $127,200
2018 $128,400
2019 $132,900
2020 $137,700
2021 $142,800
2022 $147,000
Source: Social Security Administration

If you earn more than the maximum in any year, whether in one job or several, the SSA will only use the maximum to calculate your benefit. However, any employer you work for during the year must withhold Social Security taxes from your pay, regardless of how much other employers have withheld. You may then end up with total Social Security taxes withheld that exceeds the maximum.

In the event that you overpay, request a refund of the excess Social Security tax when you file your tax return the following year.

More from GOBankingRates

About the author

Georgina Tzanetos is a former financial advisor who studied post-industrial capitalist structures at New York University. She has eight years of experience in concentrations in asset management, portfolio management, private client banking and investment research. Georgina has written for Investopedia and WallStreetMojo.

Leave a Reply

Your email address will not be published. Required fields are marked *