How Payroll Taxes Fund Social Security and Medicare

In this episode of The Tax Policy Podcast, Lucas and Luna break down the payroll tax system that funds Social Security and Medicare. They explain the 12.4 percent Social Security tax on wages up to the annual cap ($168,600 in 2026), the 2.9 percent Medicare tax with no cap, and the additional 0.9 percent surcharge on high earners. Using the example of a typical worker earning $75,000 per year, they calculate exactly how much goes to each program. They also discuss why payroll taxes are regressive — hitting lower-income workers harder than investment income — and explore recent proposals to expand the Social Security tax base. Finally, they consider how the trust fund depletion dates (2034 for Social Security, 2036 for Medicare) could drive future tax changes, and what that means for younger workers. #PayrollTax #SocialSecurity #Medicare #FICA #SelfEmploymentTax #WageTax #RegressiveTax #TrustFund #TaxBase #TaxCap #AdditionalMedicareTax #OASDI #HI #FiscalSustainability #Economics #TaxPolicy #FexingoBusiness #BusinessPodcast Keep every episode free: buymeacoffee.com/fexingo