What is the annual limitation on the amount of income taxed for Social Security purposes known as?

The term that describes the annual limitation on the amount of income that is subject to Social Security tax is referred to as the Social Security wage base. This figure is adjusted each year to account for wage growth and inflation. For 2023, for example, the Social Security wage base is $160,200.

Income beyond this cap is not subject to Social Security tax, which helps to ensure that the program is funded primarily through contributions from wages below this threshold. The Social Security Administration sets this base limit to manage the program's financing effectively and to maintain its sustainability.

On the other hand, while the Medicare wage base is relevant, it does not impose a similar cap; all earned income is subject to Medicare taxes, regardless of the amount. Other terms like tax withholding limit and income tax cap do not specifically relate to how Social Security taxes are determined, which is why they do not accurately describe the concept in question.