Social Security’s Taxable Wage Base Jumps to $192,300 for 2027: What Houston and Denver Business Owners Need to Know

The Social Security Administration just raised the taxable wage base to $192,300 for 2027 — a $7,800 jump from 2026’s $184,500 — alongside a 3.6% cost-of-living adjustment for benefits. For most employees, that change is barely noticeable on a pay stub. For business owners who cover both halves of the tax, whether through payroll or self-employment tax, it is a real line-item increase in the cost of running a business in 2027. And for owners in Colorado, that increase compounds with a state-level payroll tax that Texas simply does not have.

What the 2027 Wage Base Increase Actually Costs

The Social Security (OASDI) portion of payroll tax is 6.2% on wages up to the taxable maximum, paid by both the employee and the employer. At the new $192,300 cap, the maximum Social Security tax per side rises to $11,922.60 for 2027, up from $11,439.00 in 2026. Self-employed owners pay both the employee and employer shares through self-employment tax, so the OASDI portion of that calculation rises from a maximum of $22,878.00 in 2026 to $23,845.20 in 2027 — an increase of $967.20 before Medicare is even factored in. Medicare’s 1.45%/1.45% (2.9% for the self-employed) has no wage cap and is unchanged, though the additional 0.9% Medicare tax above statutory thresholds still applies.

Houston and The Woodlands: One Layer of Federal Tax, No State Add-On

Texas has no state income tax, so business owners here feel the Social Security wage base increase as a purely federal cost with nothing to offset it against on a state return. Sole proprietors and single-member LLC owners should rework their 2027 quarterly estimates around the new $192,300 ceiling. Owners who run an S-corp and set their own “reasonable compensation” figure should also revisit that number now — the higher wage base shifts the math on how much W-2 salary actually clears the cap before the marginal cost of additional salary drops to the Medicare-only rate.

Denver Owners Stack a Second Payroll Tax on Top

Colorado employers already collect FAMLI (Paid Family and Medical Leave Insurance) premiums of 0.88% of wages, split 0.44% employer and 0.44% employee, and those premiums are capped at the same federal Social Security wage base. That means the 2027 increase to $192,300 raises the maximum FAMLI premium base right along with the Social Security cap — in 2026, 0.88% of the $184,500 cap works out to a maximum combined premium of $1,623.60; applying the same rate to the new $192,300 cap for 2027 would bring that maximum to roughly $1,692.24, though Colorado recalculates the FAMLI rate annually so that figure isn’t locked in yet. Employers with ten or more employees owe the full 0.88%; smaller employers are responsible for remitting the 0.44% employee share. Either way, Denver business owners are tracking two payroll taxes that move with the same federal number, while Houston owners are only tracking one.

If you run payroll in Texas or Colorado, update your 2027 payroll software and withholding tables for the new $192,300 Social Security wage cap before your first January payroll run.
If you’re a Colorado employer, confirm your FAMLI premium rate and headcount reporting (due by February 28) are current for 2027 — the rate is recalculated annually and directly affects your actual dollar exposure.
If you’re self-employed in Houston or The Woodlands and pay quarterly estimates, rebuild your Q1 2027 estimate around the new $192,300 self-employment tax ceiling so you aren’t underpaying.
If you run an S-corp and set your own reasonable compensation, revisit that figure now — the higher wage base changes the tradeoff between W-2 salary and distributions for 2027.
If you operate payroll in both states, build a short 2027 checklist that separates the federal-only Texas calculation from the federal-plus-FAMLI Colorado calculation so nothing gets missed.

At Petry Tax & Advisory, we help business owners across Houston, The Woodlands, and Denver plan for payroll and self-employment tax changes like this before they show up in a paycheck or a quarterly estimate — contact us for a consultation to get your 2027 numbers right.

This post is for general informational purposes only and does not constitute legal or tax advice. Consult with a qualified professional about your specific situation.

Source: Social Security Administration — 2027 Fact Sheet | Colorado FAMLI — Employers