The Social Security Administration has announced that the Social Security wage base will rise to $192,300 in 2027, up from $184,500 in 2026. If you run payroll in Texas, now is a good time to update your system for 2027 and get ready for W-2s, 1099s and year-end filings, which include several new reporting items for 2026.
What changes for 2027
Social Security tax (OASDI) applies only to wages up to the annual wage base. Medicare tax has no wage limit. The tax rates themselves are not changing.
| Item | 2026 | 2027 |
|---|---|---|
| Social Security wage base | $184,500 | $192,300 |
| Employee Social Security + Medicare rate | 7.65% | 7.65% |
| Self-employed rate | 15.30% | 15.30% |
| Medicare wage limit | None | None |
| Maximum Social Security tax per employee (and matched by employer) | $11,439 | $11,922.60 |
The 7.65% employee rate is 6.2% Social Security plus 1.45% Medicare, and the employer pays a matching amount. An additional 0.9% Medicare tax applies to individuals earning above $200,000 ($250,000 for married couples filing jointly).
For employees earning more than the wage base, Social Security withholding stops once their year-to-date wages reach the limit. Your payroll software should handle this automatically, but only if the 2027 limit is loaded correctly before your first January payroll.
New W-2 reporting for tax year 2026
The IRS’s 2026 instructions for Forms W-2 and W-3 add several items employers should know about before preparing W-2s in January:
- Qualified overtime (box 12, code TT): Employers report the total amount of qualified overtime compensation paid to the employee. This supports the new individual deduction for qualified overtime pay (up to $12,500, or $25,000 for joint filers, with income limits).
- Cash tips (box 12, code TP): Employers report the total cash tips the employee reported to them.
- Tipped occupation codes (box 14b): Box 14 is now split into 14a (Other) and 14b, where employers enter the Treasury Tipped Occupation Code(s) for tipped workers.
- Trump account contributions (box 12, code TA): If you made employer contributions to employees’ Trump accounts (allowed starting July 4, 2026), they are reported with code TA.
- Higher penalties: Penalties for failing to file or furnish correct information returns increase for returns required to be filed after December 31, 2026.
If you pay overtime or have tipped employees, check now whether your payroll records separate these amounts. Pulling this information together in January is much harder than tracking it during the year.
Higher 1099-NEC threshold for 2026 payments
For payments made in 2026, the reporting threshold for Form 1099-NEC (nonemployee compensation) rises from $600 to $2,000. The IRS says this threshold will be adjusted for inflation beginning in 2027. You should still collect a Form W-9 from contractors and keep good records of what you paid them.
Key filing dates
When a due date falls on a Saturday, Sunday or legal holiday, the IRS and the Texas Workforce Commission (TWC) treat filings made on the next business day as on time. That moves several dates this season:
| Filing | Period | Due date |
|---|---|---|
| Form 941 (federal quarterly payroll return) | July to September 2026 | Monday, November 2, 2026 |
| TWC quarterly wage report and tax payment | July to September 2026 | Monday, November 2, 2026 |
| Forms W-2 to employees and to the SSA (with Form W-3) | 2026 | Monday, February 1, 2027 |
| Form 1099-NEC to recipients and the IRS | 2026 | Monday, February 1, 2027 |
| Form 941 | October to December 2026 | Monday, February 1, 2027 |
| Form 940 (annual FUTA return) | 2026 | Monday, February 1, 2027 |
| TWC quarterly wage report and tax payment | October to December 2026 | Monday, February 1, 2027 |
The IRS allows 10 extra calendar days to file Forms 941 and 940 if all the related taxes were deposited on time. Payroll tax deposits still follow your monthly or semiweekly deposit schedule.
A reminder on Texas unemployment tax
Texas employers pay state unemployment tax to TWC on the first $9,000 of wages per employee, per year. You must still report all gross wages every quarter, and file a report even for quarters when no tax is due because employees have already passed the $9,000 limit.
Year-end payroll checklist
- Update your payroll system with the 2027 Social Security wage base of $192,300 before the first payroll of 2027.
- Ask employees to review their name, address and Social Security number so W-2s are correct.
- Confirm your records separate qualified overtime and reported cash tips, and that tipped occupation codes are assigned where needed.
- Gather W-9s from contractors and total each contractor’s 2026 payments against the new $2,000 threshold.
- File your third-quarter Form 941 and TWC report by November 2, 2026, if you have not already.
- Reconcile your four quarterly Form 941s with your W-2 totals before filing W-2s.
- Put February 1, 2027, on your calendar for W-2s, 1099-NECs, the fourth-quarter Form 941, Form 940 and your TWC report.
How Texas FinServ can help
Texas FinServ provides payroll processing and bookkeeping for small businesses in Plano, the Dallas-Fort Worth area and across Texas. We can help you set up payroll for 2027, prepare quarterly Form 941 and TWC filings, prepare W-2s and 1099s, and keep your books reconciled so year-end reporting is easier. If you receive a letter from the IRS about payroll taxes, we can help you understand it, and IRS representation is coordinated through our credentialed CPA, enrolled agent or attorney partners.
We are always here to help or guide you. Call us at (833) 786-1110 or contact us to book a free 30-minute consultation.
This article is general information, not tax, legal or financial advice for your situation. Tax laws and government figures change; talk with us or another qualified professional before acting.
