What Social Security tax is and why it comes out of your pay
Social Security tax is a federal payroll tax that funds the Social Security program. It comes out of your paycheck automatically if you work as an employee, and your employer matches the amount you pay. The current rate is 6.2% of your wages, up to a yearly earnings cap that changes each year — in 2024 that cap is $168,600, meaning you stop paying Social Security tax once you earn that much in a calendar year.
The money you pay goes into a trust fund that pays benefits to people who are retired, disabled, or whose family members have died. When you work and pay Social Security tax, you earn credits toward your own future benefits. You need 40 credits (roughly 10 years of work) to receive retirement benefits, and fewer credits for disability or survivor benefits.
If you are self-employed, you pay both the employee and employer portions — 12.4% total — though you can deduct half of it on your tax return. If you work for someone else, your employer handles the employer portion and you see only the 6.2% deduction on your stub.
Key Takeaways
- Social Security tax is 6.2% of your wages as an employee, with your employer paying an equal 6.2%, and stops once you reach the yearly earnings cap ($168,600 in 2024).
- Self-employed workers pay 12.4% total but can deduct half of it when filing taxes.
- Every dollar you pay in Social Security tax earns you credits toward retirement, disability, or survivor benefits later.
- You need 40 credits to receive retirement benefits, which typically takes about 10 years of work to accumulate.
- Your employer is required by law to withhold and report your Social Security tax to the federal government.
How the earnings cap works and when you stop paying
The earnings cap (also called the wage base) is the maximum amount of income subject to Social Security tax in a given year. In 2024, that cap is $168,600. Once you earn that amount in a calendar year, your employer stops withholding Social Security tax from your paychecks for the rest of that year, even if you continue working and earning more.
The cap increases most years based on changes in average wages across the country. This means the 2025 cap will be different from 2024, and so on. If you work for multiple employers in the same year, you are responsible for tracking whether you have hit the cap across all jobs combined. If you overpay — for example, because you worked for two employers and each withheld Social Security tax on their portion of your income — you can claim a credit for the overpayment when you file your federal tax return.
High earners and people with multiple jobs are most likely to hit the cap. Once you do, you stop seeing that 6.2% deduction on your pay stub for the remainder of that calendar year.
The difference between Social Security tax and Medicare tax
Social Security tax and Medicare tax are separate payroll taxes that often appear on the same pay stub. Medicare tax is 1.45% of your wages with no earnings cap — you pay it on every dollar you earn, no matter how much you make. Your employer matches an additional 1.45%.
If you earn over a certain threshold ($200,000 for single filers, $250,000 for married filing jointly), you pay an extra 0.9% Medicare tax on income above that threshold. This additional tax does not have an employer match.
Together, Social Security and Medicare taxes are often called FICA taxes (Federal Insurance Contributions Act). On your pay stub, you will see them listed separately — one line for Social Security, one for Medicare — but they fund different programs and have different rules.
How your Social Security tax translates to future benefits
The amount you pay in Social Security tax does not directly determine the amount of your future benefit. Instead, your payments earn you credits, and the amount of your benefit depends on your highest 35 years of earnings and the age at which you claim.
In 2024, you earn one credit for every $1,730 in wages you pay Social Security tax on, up to four credits per year. You need 40 credits total to receive retirement benefits — this typically takes about 10 years of work. For disability or survivor benefits, you need fewer credits, and the number depends on your age when you become disabled or die.
When you reach retirement age (67 for people born in 1960 or later), you can claim your retirement benefit. The benefit amount is based on your average earnings over your highest 35 working years. If you claim earlier, your benefit is reduced; if you claim later, it increases. Your actual benefit statement, which you can view on ssa.gov, shows your estimated benefit based on your actual earnings record.
What happens if you do not pay Social Security tax
If you work in a job that does not pay Social Security tax — certain government employees, some religious workers, or people working for employers who have obtained a waiver — you do not earn credits toward Social Security benefits. This means you may not be able to receive retirement, disability, or survivor benefits later, even if you worked for many years.
Some government employees are covered by alternative pension systems instead of Social Security. If you have worked in both a job covered by Social Security and a job not covered, your benefit may be reduced by the Government Pension Offset or Windfall Elimination Provision, depending on your situation.
If you are unsure whether your current job pays into Social Security, check your pay stub for the Social Security tax line, or ask your employer or payroll department directly.
Self-employed workers and Social Security tax
If you are self-employed, you pay Social Security tax through self-employment tax when you file your annual tax return. The rate is 12.4% for Social Security (the combined employee and employer portions) on your net self-employment income, plus 2.9% for Medicare (1.45% employee, 1.45% employer).
You calculate self-employment tax on Schedule SE of your tax return. The earnings cap still applies — you pay the 12.4% rate only on self-employment income up to the yearly cap. Once you reach the cap, you stop paying the Social Security portion but continue paying Medicare tax on all remaining income.
When you file your return, you can deduct half of your self-employment tax as a business expense, which lowers your taxable income. This deduction partially offsets the fact that you are paying both the employee and employer portions.
Checking your Social Security earnings record
Your employer reports your wages and Social Security tax payments to the Social Security Administration each year. This information builds your earnings record, which determines your future benefit amount. You can view your record for free at ssa.gov by creating a my Social Security account.
Your earnings record shows your reported wages for each year you worked. It is important to check it periodically to make sure the information is correct. If you spot an error — for example, wages that were not reported or were reported under the wrong name or Social Security number — you should contact Social Security right away to correct it. Errors can reduce your future benefit.
You can also request a paper statement by mail if you do not have internet access. Social Security will send you a statement showing your estimated retirement, disability, and survivor benefits based on your current earnings record.
Frequently Asked Questions
Can I opt out of paying Social Security tax?
No. If you work as an employee, your employer is required by law to withhold Social Security tax from your paycheck. The only exceptions are certain government employees and some religious workers whose employers have obtained a specific waiver. If you are self-employed, you must pay self-employment tax when you file your tax return.
What if I worked in another country — does that count toward Social Security?
It depends on whether that country has a totalization agreement with the United States. Some countries do, which means work credits earned there may count toward your U.S. Social Security benefit. You will need to contact Social Security directly to find out whether your foreign work counts and how to report it.
Do I get my Social Security tax back if I do not claim benefits?
No. The money you pay in Social Security tax goes into the trust fund immediately to pay current beneficiaries. If you die before claiming benefits, your family members may be able to receive survivor benefits based on your earnings record, but you do not get a refund of your contributions.
Why did my Social Security tax deduction change this year?
The most common reason is that you hit the yearly earnings cap and your employer stopped withholding Social Security tax for the rest of the year. Another reason could be a change in your pay rate or hours worked. If you cannot explain the change, ask your payroll department to review your withholding.
If I pay more Social Security tax, will my benefit be higher?
Not necessarily. Your benefit is based on your highest 35 years of earnings, not on the total amount you paid in tax. Earning more in a single year may replace a lower-earning year in your record, which could increase your benefit, but paying more tax in itself does not automatically mean a higher benefit.