Social Security tax cap -- indexed to inflation?

Okay, so Social Security taxes are taken out of my paycheck, up to, what, around $80,000. When was that figure established? And is it indexed to inflation? If, over the next ten years, inflation is a cumulative 50%, will that taxable income cap rise to $120,000, or is it set to a specific amount by statute?

I don’t know if it is indexed to inflation. But it has gone up every year since I became aware of it’s existance.

Yes, the amount of income subject to Social Security tax is indexed to growth in average wages. The cap was last modified by law in 1983 and since then has risen automatically with average wage growth.

Here’s the wage cap for 2003 thru 2005. Scroll to the bottom of the page and click “What is the maximum amount of taxable earnings for each year?” for more history.

You might also wanna look at this for what types of income do not count towards social security earnings.

Incorrect. The correct answer is NO, the amount of income subject to Social Security tax is indexed to growth in average wages. The wage index is considerably different than inflation - and typically much greater. That’s one of the issues in the Social Security controversy - the benefit is also indexed to wages. If the benefit index was changed to inflation only, most of the shortfall would disappear.