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Adjusted Gross Income includes your taxable wages, pensions, interest, dividends, other taxable income and tax-exempt income. If you have provisional income of less than $25,000 ($32,000 if you are married and filing a joint return, none of your Social Security benefits will be taxable. If your provisional income is between $25,000 and $34,000 ($32,000 and $44,000 if married and filing a joint return) up to 50% of your benefits may be taxable. If your provisional income is more than $34,000 ($44,000 if married and filing jointly) up t 85% of your Social Security benefits may be taxable.
For 2016, the maximum amount of taxable earnings for Social Security and Medicare is $118,500. In other words, an employee must pay 6.2% of any income up to $118,500 for 2016 = $7,347. But any dollar you make above $118,500 is free of the Social Security tax.