Social Security and Medicare are payroll taxes, not federal income taxes

Social Security and Medicare are separate payroll taxes that come out of your paycheck, but they are not federal income taxes. Federal income tax, Social Security tax, and Medicare tax are three different things that all get withheld from your wages. Many people think of them together because they all appear on a pay stub, but they fund different programs and have different rules.

When you work, your employer withholds 6.2% of your wages for Social Security and 1.45% for Medicare (you pay these amounts; your employer pays matching amounts). These go into separate trust funds managed by the Social Security Administration and Centers for Medicare & Medicaid Services. Federal income tax, which varies based on your filing status and deductions, goes to the general Treasury and funds all federal spending.

The distinction matters because Social Security and Medicare have their own may be able to access rules, benefit formulas, and funding timelines. You cannot claim Social Security benefits just because you paid federal income tax, and you cannot claim Medicare at 65 just because you paid into it — you have to meet specific work history requirements for each program.

Key Takeaways

  • Social Security and Medicare taxes are withheld from paychecks but are separate from federal income tax, each funding its own program.
  • You need 40 work credits (roughly 10 years of work) to receive Social Security retirement benefits, and 40 credits to receive Medicare at age 65.
  • Self-employed people pay both the employee and employer portions of Social Security and Medicare taxes, totaling 15.3% combined.
  • If you did not work long enough to earn 40 credits, you may still receive Medicare at 65 if you are married to someone who did, or you may receive a reduced Social Security benefit based on a spouse's record.

How Social Security taxes build your work record

Every dollar you pay into Social Security goes toward your individual work record. The Social Security Administration tracks your earnings year by year and assigns you work credits based on how much you earned. In 2024, you earn one credit for every $1,730 in wages (this amount changes each year). You can earn a maximum of four credits per year, which means you need about 10 years of work to earn the 40 credits required for retirement benefits.

Your Social Security benefit amount is calculated from your highest 35 years of earnings. The longer you work and the more you earn, the higher your monthly benefit will be. If you have fewer than 35 years of earnings, zeros are counted for the missing years, which lowers your average. This is why someone who worked only 20 years will receive a smaller benefit than someone who worked 40 years, even if they earned the same amount per year.

Federal income tax does not affect this calculation at all. You could pay thousands in federal income tax and still not may have access to for Social Security if you did not have enough work credits. Conversely, you could have very little federal income tax withheld and still build Social Security credits as long as you earned wages.

How Medicare taxes connect to your coverage at 65

Medicare may be able to access at age 65 also depends on work credits, not on how much federal income tax you paid. You need 40 work credits to receive Medicare Part A (hospital insurance) at 65 without paying a premium. The credits are the same ones you earn for Social Security — there is no separate Medicare credit system.

If you did not work long enough to earn 40 credits, you can still buy Medicare Part A at 65, but you will pay a monthly premium. The premium is higher if you have fewer than 30 credits. If you have 30 or more credits but fewer than 40, you pay a reduced premium. Only people with 40 credits get Part A premium-free.

Medicare Part B (medical insurance) and Part D (prescription drug coverage) have their own premium structure and are not tied to work credits. Part B has a standard premium that most people pay, though it can be higher if your income is above certain thresholds. Part D premiums vary by plan.

Self-employed people and payroll taxes

If you are self-employed, you pay both the employee and employer portions of Social Security and Medicare taxes through self-employment tax. This totals 15.3% of your net self-employment income (12.4% for Social Security and 2.9% for Medicare). You report this on Schedule SE when you file your federal income tax return.

Even though the rate is higher, self-employment tax still builds the same work credits as regular payroll taxes. You need the same 40 credits for Social Security retirement and Medicare may be able to access. The difference is that you pay the full amount yourself rather than splitting it with an employer.

Self-employed people can deduct half of their self-employment tax when calculating their adjusted gross income for federal income tax purposes. This is a tax deduction, not a credit, and it does not change how much Social Security or Medicare tax you owe.

What happens if you did not work enough years

If you reach 62 and do not have 40 work credits, you cannot receive Social Security retirement benefits on your own record. However, you may be able to receive benefits based on a spouse's or ex-spouse's work record if you are at least 62 and married (or divorced for at least two years). A spouse's benefit is typically 32% to 50% of the primary earner's benefit, depending on your age when you claim.

For Medicare, if you do not have 40 credits by age 65, you can still enroll in Medicare Part A by paying a premium. The premium in 2024 ranges from about $278 to $505 per month depending on how many credits you have. Part B and Part D premiums explore regardless of your work history.

Some people who did not work in the United States but worked in another country may have credits from that country counted toward Social Security and Medicare through totalization agreements. You would need to contact Social Security directly to find out whether your foreign work counts.

How to check your work credits and earnings record

You can view your Social Security earnings record and work credits online at ssa.gov by creating a my Social Security account. The account shows your year-by-year earnings, the number of credits you have earned, and an estimate of your retirement benefit at different ages. You should check this record every few years to make sure your earnings are recorded correctly.

If you find an error — such as earnings that were not credited to your account or earnings credited under the wrong name — you can report it to Social Security. You have a limited time to correct errors, so it is worth checking before you turn 60. Bring your tax returns or W-2 forms as proof of the earnings.

You can also call Social Security at 1-800-772-1213 to ask about your work credits and earnings record. Have your Social Security number ready. If you are deaf or hard of hearing, you can call the TTY number at 1-800-325-0778.

When to talk to your doctor or Social Security about Medicare

If you are approaching 65 and unsure whether you have enough work credits for Medicare, contact Social Security at least three months before your birthday. They can tell you exactly how many credits you have and what your options are. If you need to buy Part A with a premium, knowing this early gives you time to budget for it.

If you have a chronic condition and are concerned about affording Medicare premiums and out-of-pocket costs, ask your doctor about programs like Medicare Savings Programs or the Low-Income Subsidy for Part D. These are run by your state and can reduce what you pay for premiums, deductibles, and copays. Your doctor's office may have a social worker who can help you find these programs.

If you are still working past 65 and have not yet claimed Social Security, ask Social Security whether you should delay your claim. Waiting until 70 increases your monthly benefit by about 8% per year. Your earnings record and life expectancy matter in this decision, and Social Security can walk you through the math.

Frequently Asked Questions

If I paid a lot in federal income tax, does that count toward Social Security?

No. Federal income tax and Social Security tax are completely separate. Social Security only counts the wages you earned and the Social Security tax withheld from them. How much federal income tax you paid has no effect on your Social Security benefits or work credits.

Can I get Medicare at 65 if I never worked?

You can enroll in Medicare Part A and Part B at 65, but you will pay a premium for Part A (hospital insurance). If you have no work credits, the Part A premium is the highest rate. Part B and Part D have standard or income-based premiums that explore to everyone. You should still enroll even if you have to pay premiums, because waiting past 65 can result in permanent late-enrollment penalties.

What if I worked in another country before moving to the United States?

The United States has totalization agreements with about 30 countries that allow work credits from those countries to count toward Social Security and Medicare. Contact Social Security to find out whether your country has an agreement and whether your foreign work can be credited. You will need to provide documentation of your work history from that country.

Do I have to pay Social Security and Medicare taxes if I am over 65 and still working?

Yes. As long as you are earning wages, you pay Social Security and Medicare taxes regardless of your age. There is no age at which these taxes stop. However, once you reach full retirement age (66 to 67 depending on your birth year), your Social Security benefits are no longer reduced if you continue working and earning above a certain amount.

If I did not work long enough, can I still get any Social Security benefit?

If you have fewer than 40 credits but are married or were married, you may receive a spousal or ex-spousal benefit. If you are divorced and your marriage lasted at least 10 years, you can claim on your ex-spouse's record at 62 even if you never worked. The benefit is typically 32% to 50% of what your ex-spouse receives at full retirement age.