Higher earners would pay Social Security taxes on more wages under HR 3271

What does this do?

HR 3271 would apply Social Security payroll taxes to wages between the current cap of roughly $176,100 and $400,000, closing a gap that currently exempts that income. It would also add a new 1.2 percent Medicare tax on wages above $400,000 for single filers and above $500,000 for married couples filing jointly. Additionally, it would significantly raise the existing 3.8 percent tax on investment income for higher earners, adding over 13 percentage points in some cases.

Who does it affect?

Higher-income workers earning roughly $160,000 to $400,000 or more per year would face increased payroll taxes, as would wealthy investors and business owners with significant investment income. Lower and middle-income workers would see no change to their current tax rates or take-home pay.

Why does it matter?

The additional revenue collected from these changes would be directed into the Social Security and Medicare trust funds. These programs currently serve tens of millions of retirees, disabled Americans, and low-income individuals.

What does it cost, and who pays?

• Social Security tax gap closed up to $400,000
• New 1.2% Medicare tax above $400,000–$500,000
• Investment tax rate up 13+ points over 3.8%

Where does it stand?