Each year, the government establishes an income cap for

Social Security taxes

Explanation:

The tax levied on both the employer and the employees with an objective to fund the Social Security program is called as Social Security tax. This tax is taken to help out the millions of Americans by providing retirement , or  disability or are survivorship benefits. The Federal Insurance Contributions Act or Self-Employed Contributions Act (SECA) collects this tax in the form of a payroll tax.

Currently the rate of social Security is 12.4%. Half of this is paid by employers (i.e 6.2%) and remaining half is paid by the employee.  In FY 2019-20 , the income cap is $132,900 per annum

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