In 2026, North & South Carolina policymakers and residents alike have turned their attention to social security taxes following Elon Musk’s milestone as the world’s first trillionaire. Musk’s net worth soared to $1.2 trillion after the public offering of SpaceX, sparking renewed conversations throughout the Carolinas on how wealth is taxed, and how social security contributions function for the ultra-wealthy compared to everyday workers.

The Social Security Cap and How It Works

The current social security cap stands at $184,500 in 2026. That means wages above this threshold are exempt from social security payroll tax. In North & South Carolina, as nationwide, most workers and employers each contribute 6.2% of earnings up to this maximum taxable income. Individuals who are self-employed pay the combined rate, 12.4%, also only up to the cap. This wage-based cap has become a focal point in debates about fairness in tax policy, as demonstrated by Senator Bernie Sanders’ recent comments referencing Musk’s tax payments.

Stock-Based Compensation and Musk’s Tax Structure

Elon Musk’s compensation is structured differently from most Americans, with the vast majority of his wealth held through stock based compensation and stock options instead of a large annual salary. Gains from these stocks and stock options primarily generate income through price appreciation, which is subject to capital gains tax, not payroll taxes. As a result, Musk’s liability for social security taxes remains limited and sometimes even falls below the cap, because only his small base salary is subject to the tax.

Calls for Reform: The Social Security Expansion Act

The situation has fueled calls for reform in North & South Carolina, echoing a national push led by Senator Sanders. His proposed Social Security Expansion Act seeks to lift the wage cap for earnings above $250,000 and expand the types of income—including certain stock based compensation—that would be taxed for social security purposes. If enacted, the act would directly impact high earners in the Carolinas and across the country, potentially increasing contributions to the system from individuals with substantial non-wage income.

Implications for Workers and the Self-Employed

For Carolina workers, the rules remain straightforward: wage earners and their employers share the burden of social security contributions up to the cap, while self-employed individuals face the full rate. These rules do not currently apply to unearned income, further highlighting the distinctions between wage earners and the ultra-wealthy whose fortunes are typically tied to stocks or investments. Supporters of reform argue that this discrepancy drives wealth inequality, while opponents raise concerns about the economic impact of broader tax obligations.

Medicare Taxes Versus Social Security Taxes

Unlike the structure of social security taxes, there is no cap on medicare taxes. This means higher earners in North & South Carolina pay medicare taxes on all their wages, regardless of income level. The debate over the social security cap continues to draw contrasts between the two systems, as well as questions about longer-term sustainability and fairness.

PolitiFact Analysis and Ongoing Discussions

A recent review by independent fact-checkers concluded that Senator Sanders’ statements about Musk’s social security tax payments are mostly accurate. However, because Musk’s compensation is heavily tied to stocks and not always structured as a salary, there are years when he could pay less than the maximum amount in payroll taxes. As North & South Carolina administrators and communities consider these developments, the conversation is shaping policies that could have a lasting impact on future generations and the financial well-being of retired workers throughout the region.