The 2025 tax rates for Social Security and Medicare

If you work as an employee, you pay 6.2% of your wages into Social Security and 1.45% into Medicare, for a combined 7.65%. Your employer matches both amounts. If you're self-employed, you pay both the employee and employer share — 12.4% for Social Security and 2.9% for Medicare — though you can deduct half of the self-employment tax when you file your taxes.

These rates have stayed the same since 1990 for Medicare and since 1988 for Social Security. What changes each year is the wage base limit — the maximum amount of income subject to Social Security tax. For 2025, that limit is $168,600. Any income above that amount is not taxed for Social Security, though Medicare tax applies to all wages with no upper limit.

The rates apply to W-2 wages, tips you report to your employer, and net self-employment income. They do not apply to investment income, rental income, or other non-wage earnings.

Key Takeaways

  • Employees pay 6.2% for Social Security and 1.45% for Medicare; employers match both amounts.
  • Self-employed workers pay 12.4% for Social Security and 2.9% for Medicare on net self-employment income.
  • In 2025, Social Security tax stops applying once you earn $168,600; Medicare tax has no income cap.
  • These percentages have not changed since 1988 (Social Security) and 1990 (Medicare), though the wage base limit rises most years.

How the wage base limit affects what you pay

The wage base limit is the income threshold where Social Security tax stops. If you earn $168,600 or less in 2025, all of it is subject to the 6.2% Social Security tax. If you earn $200,000, only the first $168,600 is taxed for Social Security; the remaining $31,400 is not.

This limit changes almost every year because it is tied to the national average wage index. The Social Security Administration announces the new limit in October for the following year. Medicare tax, by contrast, has no wage base limit — you pay 1.45% on every dollar of wages, no matter how much you earn.

High earners also pay an additional 0.9% Medicare tax on wages above $200,000 (if single) or $250,000 (if married filing jointly). This extra tax was added in 2013 and applies to both employees and self-employed workers.

What self-employed workers need to know

If you're self-employed, you report your income on Schedule C and calculate self-employment tax on Schedule SE. Your net self-employment income — gross income minus business expenses — is what gets taxed. You pay 12.4% for Social Security (up to the $168,600 limit) and 2.9% for Medicare on all net self-employment income.

Self-employment tax is higher than employee tax because you cover both sides of the payroll tax. However, you can deduct half of your self-employment tax as an adjustment to income when you file your federal tax return. This deduction reduces your taxable income but does not reduce the amount of Social Security or Medicare tax you owe.

If you have both W-2 wages and self-employment income, the Social Security wage base limit applies to your combined income. For example, if you earned $150,000 in W-2 wages and $30,000 in self-employment income, only $18,600 of the self-employment income would be subject to the 6.2% Social Security tax.

How these taxes fund Social Security and Medicare benefits

The 6.2% Social Security tax you pay goes into the Social Security Trust Fund, which pays retirement benefits, survivor benefits, and disability benefits. The 1.45% Medicare tax funds Part A (hospital insurance). These are not savings accounts in your name — they are payroll taxes that fund current beneficiaries and are credited to your earnings record, which determines your future benefit amount.

Your earnings record is what Social Security uses to calculate your retirement benefit. Higher lifetime earnings generally mean a higher benefit, though there is a maximum benefit amount. The Social Security Administration tracks your earnings each year based on the W-2s and self-employment tax returns you file.

Medicare Part B (medical insurance) and Part D (prescription drug coverage) are funded partly by premiums you pay when you enroll, not by payroll tax alone. Part A is funded by the payroll tax, but most people do not pay a premium for Part A if they or their spouse paid Medicare tax for at least 10 years.

Tax withholding and what appears on your pay stub

If you're an employee, your employer withholds Social Security and Medicare tax from each paycheck. On your pay stub, you'll see these listed as "Social Security" (or "OASDI" — Old Age, Survivors, and Disability Insurance) and "Medicare" or "HI" (Hospital Insurance). The amount withheld is calculated automatically based on your gross wages and the current tax rates.

Your employer also withholds federal income tax, which is separate from Social Security and Medicare tax and varies based on the W-4 form you file. Some states and cities also withhold state or local income tax. The Social Security and Medicare amounts are fixed percentages and do not change based on your W-4.

If you're self-employed, you do not have an employer to withhold tax. You pay self-employment tax when you file your annual tax return, or you can make quarterly estimated tax payments to avoid a large bill in April. The IRS provides Form 1040-ES to help you calculate quarterly payments.

Changes to watch for in future years

The Social Security wage base limit typically rises each year to keep pace with wage growth. The 2025 limit of $168,600 is higher than the 2024 limit of $168,600. The Social Security Administration publishes the new limit each October, so you can plan ahead if you expect to earn near or above the threshold.

The tax rates themselves — 6.2% for Social Security and 1.45% for Medicare — have remained stable for decades. Congress would need to pass new legislation to change these rates. However, the additional 0.9% Medicare tax on high earners has been in place since 2013 and applies to wages above $200,000 (single) or $250,000 (married filing jointly).

If you're near the wage base limit or earn above the high-earner Medicare threshold, tracking your year-to-date earnings can help you understand how much tax you'll owe. Many payroll systems and tax software calculate this automatically, but it's worth reviewing your pay stub to confirm the amounts are correct.

Frequently Asked Questions

Why do I pay Social Security tax if I'm already receiving Social Security benefits?

If you work while receiving benefits before your full retirement age, you still pay Social Security tax on your wages. The tax goes into the Trust Fund to support other beneficiaries. Your continued work record may also increase your future benefit amount if your current earnings are higher than some of your earlier years.

What happens if I work for multiple employers in the same year?

Each employer withholds Social Security tax based on your wages with them. If your combined wages exceed $168,600, you may overpay Social Security tax. When you file your tax return, you can claim a credit for the overpayment, and the IRS will refund it to you.

Do I pay Social Security and Medicare tax on tips?

Yes, if you report tips to your employer, they are treated as wages and subject to both Social Security and Medicare tax. Your employer withholds the tax from your paycheck. Tips you do not report are not subject to payroll tax, but you are required to report all tips to your employer.

Is there a way to reduce the amount of Social Security and Medicare tax I pay?

The tax rates are set by law and apply to all wages. However, contributions to certain retirement accounts — like a traditional 401(k) or SEP-IRA — reduce your taxable income for federal income tax purposes but do not reduce Social Security or Medicare tax. Self-employed workers can deduct half of their self-employment tax when filing their return.

What if I'm a non-citizen or work without authorization?

Social Security and Medicare tax apply to all workers, regardless of immigration status. If you work using a false Social Security number or without authorization, you may still have taxes withheld, but you may not be able to claim benefits later. Contact the Social Security Administration or a tax professional for guidance on your specific situation.