Millions of taxpayers will see a tax increase in 2017: they just won't realize it immediately. That's because the tax increase won't be found with a bump in income tax brackets (more on tax brackets from Claudia Hill here) or a rate increase but a change in the cap on wages subject to Social Security taxes.
Here's how that works. Wages and self-employment income (but not investment and other unearned income) are subject to Social Security and Medicare taxes. Taken together, those taxes are known as FICA (Federal Insurance Contributions Act) taxes or payroll taxes since for employed workers, those taxes get taken right out of your paycheck. Sometimes, taxes on self-employment income are separately referred to as SECA (Self-Employment Contributions Act) taxes since self-employed persons pay both the employee and employer contributions.
All wages are subject to Medicare taxes. If you're employed, you pay Medicare tax (1.45%) as the employee, and your employer kicks in tax at the same rate (1.45%) on your total wages; if you're self-employed, you pay both portions.
As of 2014, high-income taxpayers are also subject to a Medicare surtax (.9%) tacked on to wages which exceed $200,000, or $250,000 for married taxpayers.
If you're employed, you pay Social Security tax (6.2%) as the employee, and your employer also pays the same rate of tax (6.2%); again, if you're self-employed, you pay both portions.