The Social Security tax is used to fund Social Security benefits, with employers and employees contributing. Whether you’re self-employed or your employer withholds taxes from each paycheck, you have to pay Social Security taxes. Get answers to all your questions about the Social Security tax, how it works, and why it was created.
NEW TAX LAW CHANGES
The One Big Beautiful Bill that passed includes permanently extending tax cuts from the Tax Cuts and Jobs Act, including increasing the cap on the amount of state and local or sales tax and property tax (SALT) that you can deduct, makes cuts to energy credits passed under the Inflation Reduction Act, makes changes to taxes on tips and overtime for certain workers, reforms Medicaid, increases the Debt ceiling, and reforms Pell Grants and student loans. Updates to this article are in process. Check our One Big Beautiful Bill article for more information.
Social Security taxes
Social Security didn’t always exist. The concept was implemented in the Social Security Act of 1935, which provided benefits for the primary worker in a family when they retired at age 65. It set the groundwork for the Social Security payroll tax that started getting collected in 1937 under the Federal Insurance Contributions Act (FICA). This tax was designed to fund the Social Security benefits that would be paid out.
Since its inception, additional benefits have been added to the Social Security program, including survivors’ benefits, disability benefits, and more. Here’s what you need to know about how the Social Security tax works today, and answers to questions like is SSDI taxable income?
How and why the Social Security tax is levied
Social Security is a payroll tax that is used to fund Social Security benefits. For most people, the tax is withheld from your paycheck with an equal amount paid by your employer. Others, such as self-employed individuals, typically pay their own Social Security tax as both the employee and the employer.
Today, the tax requires employees to pay 6.2% of qualifying earnings. Your employer matches that 6.2%. This results in a total contribution of 12.4% of your qualifying earnings. The taxes get paid into a trust fund that is used to pay for Social Security benefits for current recipients.
Where Social Security gets its funding
Social Security benefits are funded from three major sources. The largest is tax. Technically, this tax is broken down into two parts. The first, Old-Age and Survivors Insurance (OASI), is taxed at a rate of 5.3% (or 5.015% prior to 2019). The second, Disability Insurance (DI), is taxed at 0.9% (or 1.185%. prior to 2019). Combined, these are commonly referred to as the 6.2% Social Security tax.
Other funding comes from interest earned on the balance in the Social Security trust fund as well as the taxation of Social Security benefits.
Tax Assistant Tip:
To qualify for traditional Social Security retirement benefits, you have to earn 40 Social Security credits, which are earned based on wages and self-employment income. In 2026, you earn one credit for each $1,890 ($1,810 in 2025) in covered earnings, up to four credits per year.
Key exemptions
The Social Security tax doesn’t always apply to all of your income. Any qualifying income above the Social Security wage base does not incur any Social Security taxes. In 2026, the wage base is $184,500 ($176,100 for 2025). It changes each year with inflation.
Some people don’t have to pay the Social Security tax if they qualify for an exemption. However, these people typically will not be able to claim any Social Security benefits. These exemptions usually apply only to tiny portions of the population, including certain religious groups such as the Amish and Mennonite communities. Also, some state and local governments participate in certain public retirement systems in lieu of Social Security.
Some U.S. residents may qualify for a religious exemption. To qualify, you must be a member of a religious group that existed prior to the end of 1950. The group must provide for its dependent members with a reasonable standard of living, and it must object to accepting Social Security benefits.
If you are a member of one of the qualifying groups, you have to fill out Form 4029 to apply for this exemption. In order to qualify, you must never have been eligible to receive benefits under Social Security programs. If you’re eligible, even if you haven’t made claims yet, you cannot use this exemption.
Students may qualify for a temporary exemption if they’re employed by the same school where they’re enrolled. Students only qualify if they are employed because of their enrollment status. That means you must be a student before you obtain the job. Your job must also require you to remain a student for the exemption to qualify. This exemption only applies to income earned through the school-related job, not any other income.
Certain non-U.S. citizens and employees of foreign governments working in the U.S. may also qualify for Social Security tax exemptions. This exemption usually depends on the type of visa a person holds.
Do self-employed individuals pay Social Security tax?
Self-employed individuals have to pay both the employee and employer parts of payroll taxes, including Social Security tax, instead of just paying the employee portion of the tax, thanks to the 1954 Self-Employed Contributions Act (SECA). This act made it so that self-employed individuals have to pay Social Security and Medicare taxes.
As far as Social Security taxes go, that means self-employed individuals pay a 12.4% Social Security tax on self-employment net earnings. Part of the tax is considered a deductible business expense, but it does not make up for the much larger taxation amount self-employed individuals pay out of their own pockets compared with what an employee of a company would pay out of their paycheck.
Will I pay the tax if I continue working after I start claiming Social Security?
You may still be working when you begin drawing Social Security benefits. It may seem counterintuitive to continue paying the tax once you start taking benefits. However, you must pay the Social Security payroll tax as long as you earn wages or self-employment income that isn’t exempt from FICA or SECA taxes.
How much tax do I have to pay to qualify for Social Security benefits?
Figuring out if you qualify for traditional Social Security retirement benefits isn’t as simple as making sure you’ve paid a certain dollar amount of Social Security taxes. Instead, the system uses Social Security credits to determine eligibility. To qualify for traditional Social Security retirement benefits, you must have earned 40 Social Security credits. If you are retired and have questions about how Social Security affects your return, there is free tax counseling for older adults.
Starting in 1978, you could earn up to four Social Security credits per year by paying Social Security taxes. You earn credits based on your wages and self-employment income for the year.
In 2026, you earn one credit for each $1,890 ($1,810 in 2025) in covered earnings. To earn the full four credits possible in 2026, you must earn at least $7,560 ($7,240 for 2025). The amount to earn one credit may change from year to year and was lower in years before 2026.
Do I pay Social Security tax or income tax on my Social Security benefit payments?
If you earn between $25,000 and $34,000 per year as a single filer (or $32,000 to $44,000 if you’re married filing jointly), you will pay income taxes on up to 50% of your Social Security benefits. If you earn more than $34,000 (or $44,000 if you’re married filing jointly), you’ll pay taxes on up to 85% of your benefits. You will never be taxed on more than 85% of your Social Security benefits.
Frequently Asked Questions (FAQs)
For 2026, the Social Security tax rate is 6.2% for employees and 6.2% for employers, totaling 12.4%. Self-employed individuals pay the full 12.4%. These taxes apply only up to the 2026 Social Security wage base limit of $184,500—meaning the maximum Social Security tax an employee can pay in 2026 is $11,439 (or $22,878 for self-employed individuals). Any earnings above $184,500 are exempt from Social Security payroll taxes.
To qualify for traditional Social Security retirement benefits, you must earn 40 Social Security credits, which generally equals 10 years of covered work. You can earn up to four credits per year. In 2026, you earn one credit for every $1,890 in covered wages or net self-employment income, meaning you reach the maximum four credits for the year once you earn $7,560.
While most U.S. workers must pay Social Security taxes, specific exemptions apply to:
High earners: Income exceeding the annual wage base ($184,500 in 2026) is not taxed.
Qualifying religious groups: Members of recognized religious sects (such as the Amish or Mennonites) that conscientiously oppose public insurance and meet IRS criteria may apply for an exemption via Form 4029, though doing so permanently waives their right to future benefits.
Enrolled students: Students working for the school, college, or university where they are regularly enrolled and attending classes are exempt on wages from that campus job.
Certain government and foreign workers: State and local government employees covered by qualifying public retirement systems, foreign government employees, and nonresident aliens on specific visas (such as F-1 or J-1) may also be exempt.
Each employer is legally required to withhold the 6.2% Social Security tax up to the $184,500 limit independently, even if your combined income exceeds the cap. If your total Social Security tax withheld across multiple W-2 jobs exceeds the 2026 maximum of $11,439, you will not lose that money—you can claim the excess withholding as a dollar-for-dollar credit on your federal income tax return (Form 1040).
You never pay FICA payroll taxes on Social Security benefits, but you may owe federal income tax on up to 50% or 85% of your benefits if your combined income exceeds $25,000 (single) or $32,000 (married filing jointly). While the One Big Beautiful Bill Act did not eliminate taxes on Social Security benefits or alter those income thresholds, it introduced a temporary $6,000 Senior Deduction ($12,000 for qualifying joint filers) for taxpayers aged 65 and older through 2028, which reduces overall taxable income and helps lower the tax burden for many retirees.
Suresh Saini is the Founder and Lead Financial Researcher at Tax Assistant. He holds a Master of Commerce (M.Com) degree with a specialized focus on Advanced Accountancy, providing him with a robust academic and analytical foundation in complex accounting principles, credit systems, and personal finance structures.
Driven by a passion to democratize financial literacy, Suresh has spent years analyzing and decoding shifting fiscal guidelines. At Tax Assistant, he manages the platform’s core editorial direction, transforming dense government updates and complex banking parameters into structured, clear, and actionable guides for both individual taxpayers and small businesses across North America.
Before launching taxassistant.org, Suresh conducted deep financial and market dynamics research, focusing on asset management, personal wealth optimization, and strategic tax planning. His dedication to data integrity ensures that every piece of news, breakdown, or analysis published under his leadership is rigorously fact-checked by certified tax professionals and aligned perfectly with contemporary regulatory frameworks.
