Social Security Tax

Social Security Tax is a payroll tax collected under the Federal Insurance Contributions Act (FICA) to fund the Social Security program, which provides retirement, disability, and survivors benefits. Both employees and employers pay Social Security tax, each contributing a percentage of the employee’s wages up to a yearly wage limit known as the Social Security wage base.

Self-employed individuals pay the full amount through the self-employment tax. This tax is a primary source of funding for Social Security benefits.

Key Facts

• Tax Rate: Employees and employers each pay 6.2% of wages for Social Security, totaling 12.4%.‍
• Wage Base Limit: Social Security tax applies only up to a certain annual wage cap, which is adjusted yearly.
• Self-Employed: Self-employed individuals pay the full 12.4% as part of the self-employment tax.
• Purpose: Funds Social Security benefits, including retirement, disability, and survivors insurance.
• Collected By: The Internal Revenue Service (IRS) collects Social Security taxes via payroll withholding.

1. What is the current Social Security tax rate?

The rate is 6.2% paid by employees and 6.2% paid by employers, for a total of 12.4%.

2. Is there a maximum wage limit for Social Security tax?

Yes, only wages up to the annual Social Security wage base are subject to the tax; wages above that are not taxed for Social Security.

3. How does Social Security tax differ for self-employed individuals?

Self-employed people pay the full 12.4% themselves through the self-employment tax.

4. What benefits does Social Security tax fund?

It funds retirement benefits, disability insurance, and survivors benefits.

5. Can Social Security tax be deducted from my paycheck?

Yes, it is automatically withheld from employee paychecks by employers.