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Fixing Social Security’s looming funding shortfall could eventually mean higher taxes for American workers, as lawmakers face growing pressure to act before the program reaches a major financial crunch.
The latest Social Security trustees report, published earlier this year, projects that the Old-Age and Survivors Insurance Trust Fund, which helps pay retirement and survivor benefits to millions of Americans, will exhaust its reserves in 2032. At that point, continuing income would be enough to cover only 78 percent of scheduled benefits, meaning a 22 percent cut for all beneficiaries.
That does not mean Social Security would just disappear or stop sending payments, as payroll taxes would continue flowing into the system. But unless Congress acts to change how the program is funded, there would no longer be enough money coming in to pay benefits at their currently scheduled levels. Social Security’s costs have exceeded its total income since 2021 and are projected to remain higher throughout the trustees’ 75-year forecast period.
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The consequences of allowing the funding gap to fester would reach far beyond retirees alone. About 71.3 million people were receiving Social Security benefits in July 2026, including roughly 57.6 million people receiving retirement benefits, 5.8 million receiving survivor benefits and nearly 8 million taking home disability benefits.
The size of the gap means almost any comprehensive fix would carry a cost somewhere—through additional revenue, lower future spending or both.
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How Much Could Workers Pay?
One fix option is to raise the Social Security payroll tax rate. Workers currently pay 6.2 percent of their earnings into Social Security, while employers pay another 6.2 percent, for a combined rate of 12.4 percent. In 2026, the tax applies to the first $184,500 of earnings. Self-employed workers pay the full 12.4 percent themselves.
If Social Security’s funding gap were closed entirely through higher payroll taxes, workers could see their current 6.2 percent contribution rise to around 8.3 to 8.7 percent, based on the scenarios compared by Cato Institute, a libertarian think tank. This was laid out in "Congress Can’t Outgrow or Inflate Away the Social Security Financing Problem,” published in 2025.
For someone earning $50,000, that would mean paying roughly $1,100 to $1,200 more a year. A worker earning $100,000 could pay around $2,100 to $2,500 more, while someone earning the 2026 taxable maximum of $184,500 (which rises every year) could face an increase of roughly $3,900 to $4,500 a year.
Those figures cover only the worker’s share. Employers would pay an equal amount if the tax continued to be split evenly, as it is under the current system.
But raising the rate for every worker is only one of the tax options being discussed.
Taxing More High Earners
Another proposal gaining attention in Congress would increase the amount of high earners’ wages subject to Social Security taxes.
Democratic Senator Elizabeth Warren of Massachusetts and Republican Senator Bernie Moreno of Ohio announced in June that they were working together on legislation to lift the payroll tax cap. Under the current system, someone earning $184,500 or someone earning substantially more pays Social Security tax on the same maximum amount of wages. Warren and Moreno have argued that lifting the cap could bring additional revenue into the system without increasing Social Security taxes on workers earning below the threshold.
The idea has also received some support from other Republicans. House Appropriations Committee Chair Tom Cole of Oklahoma told The Washington Post that he was willing to consider both the payroll tax rate and increasing the amount of income subject to tax. Cole has also said options that reduce future spending, including changes to the retirement age, should be considered alongside bringing in more revenue.
A separate proposal introduced in 2025 by Senator Bernie Sanders of Vermont, Senator Warren and House Democrats would apply Social Security taxes to income above $250,000 while increasing benefits by $2,400 annually, and Sanders’ office said the proposal was designed to keep Social Security fully funded for 75 years.
The Congressional Budget Office (CBO) has examined increasing the taxable share of earnings and applying payroll taxes to earnings above $250,000 as possible policy options. Its 2024 analysis estimated that the latter approach would reduce federal deficits by about $1.43 trillion over the 2025-to-2034 period, although the estimate is not itself a recommendation from the agency.
Other Ways Congress Could Act
Taxes are not the only proposals on the table. Republican Senator Bill Cassidy of Louisiana has promoted the creation of a separate investment fund that would operate alongside Social Security. Cassidy has proposed putting $1.5 trillion into the fund over five years and investing the money to generate returns intended to help cover future program costs.
Cassidy has also joined Democratic Senator Dick Durbin and other senators from both parties on the PROMISE Act, which would establish a congressional process for developing a long-term Social Security solution rather than prescribing a specific combination of tax and benefit changes.
Benefit changes could also form part of an eventual deal, with policy options examined by the CBO having included gradually raising the full retirement age and reducing benefits for some higher earners. Such approaches would reduce program spending but would also change benefits received by affected retirees.
Contact Newsweek editors on this story: Daniel Orton and James Debens
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