The massive tax hike needed to prevent a 23% cut to Social Security benefits within a decade

Congress is well-aware that they must do something in order to prevent the Social Security Trust Fund from running dry, predicted to happen as soon as 2033 by the trustees of the fund. After that point, Social Security beneficiaries would see their monthly payments significantly shrink as the agency will have enough revenue to cover 77% of payments.

While some proposals have been put forward, none of them have gained widespread traction to move forward. Kevin Lum, a certified financial planner, explained in a recent YouTube video that lawmakers have four levers that they can use. From his 15 years of experience on Capitol Hill, he thinks they will use a combination of them, something similar to the bipartisan compromise in 1983.

But were Congress just to go for a single fix, raising Social Security taxes that go into the trust fund, how much would they have to be raised. The trustees have the answer.

Tax increase necessary to avoid cuts to Social Security

Currently, Social Security collects 12.4% from Americans’ payrolls. That amount is split 50/50 between employees and employers, unless a person is self-employed, in which case they pay the full amount. However, according to the trustees of the Social Security Trust Fund, in order to avoid future cuts to benefits that amount would need to be increased by 4.27% to a total of 16.67%.

That would translate for an American with the median income of $83,730 per year, who currently pays $5,191.26 in payroll taxes, forking over $6,978.90 to fund Social Security. Double that amount for the self-employed.

This is unlikely, as it would be more of a burden for those with lower salaries. A more popular idea amongst a vast majority of Americans is raising the payroll tax cap to tax those with incomes over $400,000. Currently, in 2026, the maximum income subject to Social Security taxes is $184,000.

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