Your 2027 Payroll Math Just Changed: The Wage Base, the COLA, and Your Deposit Schedule

Nothing about your business may have changed. But your payroll calculations and federal tax deposit schedule still might.

The Social Security Administration announced the 2027 cost-of-living adjustment (COLA) and Social Security wage base on October 14. Separately, the IRS lookback period determines whether many employers deposit payroll taxes monthly or semiweekly in 2027.

I’ll walk through what each change means, what to check, and how to make the transition manageable. For the official 2027 figures, refer to the SSA’s COLA information and contribution and benefit base information.

1. The 2027 wage base affects Social Security withholding

The Social Security wage base, also called the contribution and benefit base, is the maximum amount of an employee’s wages subject to Social Security tax in a calendar year. It changes periodically. The 2026 wage base was $184,500. On October 14, the SSA announced the 2027 wage base: $192,300. That is a $7,800 increase.

For wages up to the applicable wage base, the employee Social Security tax rate is 6.2%. The employer generally pays a matching 6.2%. Once an employee reaches the annual wage base, Social Security tax no longer applies to that employee’s additional wages for the rest of that year. Medicare tax has no wage cap.

In practical terms, a higher wage base can mean Social Security withholding continues for more of the year for employees with higher earnings. It can also increase the employer’s total Social Security tax per employee if that employee’s wages reach the new cap. The exact effect depends on each employee’s pay and year-to-date taxable wages.

What to check in your payroll setup

• Confirm the 2027 wage base. Use the amount published by the SSA, not last year’s threshold or an estimate.

• Check your payroll software. Make sure it applies the correct 2027 Social Security wage limit.

• Review higher-earning employees’ year-to-date wages. This helps you anticipate when withholding may stop at the cap.

• Budget for the employer match. The business generally pays the same 6.2% Social Security rate on covered wages, up to the wage base. For an employee whose wages reach the 2027 cap, the maximum employer Social Security tax is $11,922.60, up from $11,439 in 2026.

These are the Social Security tax rules. Additional Medicare tax has a separate threshold and is not part of the Social Security wage base. If your payroll includes different worker types, fringe benefits, or other complicating factors, check the applicable IRS guidance or ask your payroll professional to review your setup.

2. The COLA changes benefits, not your payroll tax rate

The 2027 COLA adjusts Social Security and Supplemental Security Income benefits to reflect changes in the cost of living. The adjustment is based on inflation data. It is separate from the wage base and does not change the Social Security tax rate employers withhold from wages.

The SSA announced the 2027 COLA on October 14: 3.6%. It applies to benefits payable in January 2027. The actual dollar increase depends on a person’s benefit amount. Medicare premiums or other deductions can also affect the net payment they receive.

If you or a family member draws benefits, the SSA’s COLA information page is the place to confirm the published percentage and review how benefit adjustments work. Avoid assuming that every recipient’s monthly payment will rise by the same dollar amount.

For business owners, the main takeaway is simple: keep benefit planning separate from payroll setup. The COLA concerns benefit payments. The wage base concerns how much of an employee’s wages is subject to Social Security tax.

3. Your 2027 deposit schedule comes from an earlier lookback period

The payroll deposit change that may catch employers off guard is based on the past, not on how busy payroll feels today.

For most employers filing quarterly Form 941 returns, the 2027 lookback period is July 1, 2025 through June 30, 2026. The IRS uses the employment tax liability reported for that period to determine the deposit schedule for 2027.

• If the reported liability was $50,000 or less, you’re generally a monthly schedule depositor.

• If it was more than $50,000, you’re generally a semiweekly schedule depositor.

The distinction matters: exactly $50,000 falls in the monthly category. Crossing above $50,000 moves the employer into the semiweekly category.

The test uses reported employment tax liability, not gross payroll, revenue, or the number of times you pay employees. The IRS deposit requirements explain the lookback rules and deposit schedules.

Monthly versus semiweekly in plain language

Monthly schedule depositors generally deposit employment taxes from a month by the 15th day of the following month, subject to the IRS business-day rules.

Semiweekly schedule depositors follow deadlines tied to payday:

• For wages paid Wednesday through Friday, deposit by the following Wednesday.

• For wages paid Saturday through Tuesday, deposit by the following Friday.

These rules apply based on when wages are paid. They are not determined by the end of your accounting period or when you record a payroll expense. A federal holiday can affect a deadline, so check the relevant IRS rules when planning deposits.

There is also a separate $100,000 next-day deposit rule. If an employer accumulates $100,000 or more in employment tax liability on any day, the employer generally must deposit by the next business day and becomes subject to semiweekly depositor rules for the remainder of the year and the following year. The IRS guidance explains how this rule works.

4. Semiweekly status generally means Schedule B

If you’re a semiweekly depositor, you generally file Schedule B (Form 941) with Form 941. Schedule B reports your employment tax liability by the dates wages were paid. It is not a record of deposits; the IRS receives federal deposit information through electronic payments.

Accurate daily liability records make this easier. Keep payroll dates, liability amounts, and deposit confirmations organized as you go. Waiting until a quarterly return is due can make it harder to reconstruct the details calmly.

There are exceptions and special cases. For instance, employers that filed Form 944 in either of the two preceding years use a different lookback period. The IRS also describes circumstances in which employers with lower quarterly liability may pay with their return instead of making deposits. Check the IRS rules for your filing situation before changing a deposit schedule.

A simple year-end checklist

You don’t need to rebuild your whole payroll process. A short review can help keep the change orderly:

1. Confirm the SSA’s announced 2027 figures: a $192,300 wage base and a 3.6% COLA.

2. Check that your payroll system has the correct wage base for 2027.

3. Review your reported liability for July 1, 2025 through June 30, 2026, if you file Form 941.

4. Confirm whether your 2027 deposit schedule is monthly or semiweekly.

5. If semiweekly, make sure your process captures liability by payday and accounts for Schedule B.

6. Keep a note of special rules that may apply, including the $100,000 next-day rule or Form 944 lookback rules.

A deposit schedule can change even when your business operations feel exactly the same. That doesn’t have to turn into a stressful surprise. With the correct figures, a quick lookback review, and tidy payroll records, you can make the adjustment step by step.

At Jenni’s Business Services, I help small businesses keep their books organized and make financial tasks easier to manage. If you’d like support reviewing your bookkeeping or planning for year-end, learn more about my services or get in touch.