The payroll tax rates for 2024

Social Security tax takes 6.2% of your wages, and Medicare tax takes 1.45%. Your employer matches both amounts, so the total coming out of your paycheck is 7.65% — but your employer pays another 7.65% on your behalf. If you're self-employed, you pay both the employee and employer portions, which comes to 15.3% total.

These percentages have stayed the same for several years. Social Security tax only applies to income up to a certain cap — in 2024, that cap is $168,600. Once you earn above that amount in a year, no more Social Security tax is withheld from your remaining paychecks. Medicare tax, by contrast, has no income cap, so it continues on every dollar you earn.

There is one exception: if you earn more than $200,000 as a single filer (or $250,000 if married filing jointly), an additional 0.9% Medicare tax applies to the income above that threshold. This extra tax is withheld from your paycheck and goes toward Medicare.

Key Takeaways

  • Social Security tax is 6.2% of your wages up to $168,600 per year in 2024, and Medicare tax is 1.45% with no income limit.
  • Your employer matches both taxes dollar-for-dollar, but only the employee portion (7.65%) shows as a deduction on your paycheck.
  • If you earn over $200,000 as a single filer, an additional 0.9% Medicare tax applies to income above that amount.
  • Self-employed workers pay both the employee and employer portions of these taxes, totaling 15.3% for Social Security and Medicare combined.

Why the Social Security cap exists

Social Security was designed as an insurance program where benefits are tied to what you paid in. The income cap reflects the original intent: to replace a portion of average earnings for workers at all income levels, not to tax unlimited income. Workers who earn above the cap still pay the same percentage on income below the cap, but their higher earnings don't increase their future benefits proportionally.

The cap adjusts each year based on wage growth in the economy. In 2023 it was $160,200; in 2024 it rose to $168,600. If you change jobs mid-year or work multiple jobs, you could end up paying Social Security tax on more than the cap if your employers don't coordinate. You can claim a credit on your tax return for any overpayment.

Medicare tax has no ceiling

Unlike Social Security, Medicare tax continues on every dollar you earn, no matter how high your income goes. This is because Medicare is structured differently — it's not an earnings-replacement program, and benefits don't vary based on how much you paid in. Everyone gets the same Medicare coverage at 65, regardless of income history.

The additional 0.9% Medicare tax on high earners was added in 2013 as part of the Affordable Care Act. It applies only to wages above the threshold, not to all your income. If you're married and file separately, the threshold is much lower ($125,000), so check your specific situation if that applies to you.

What these taxes actually pay for

Social Security tax funds retirement benefits, disability benefits, and survivor benefits for your family. When you turn 62 or older, you become may be able to access to receive monthly payments based on your earnings history. If you become disabled before retirement age, you may receive benefits. If you die, your spouse and children may receive survivor benefits.

Medicare tax funds hospital insurance (Part A), which covers inpatient hospital stays, skilled nursing care, hospice, and some home health services. You become may be able to access for Medicare at 65. The tax you pay now goes toward the hospital fund that covers current beneficiaries; future workers' taxes will help cover your care when you're may be able to access.

How to read these deductions on your pay stub

Look for a line labeled "Social Security" or "OASDI" (Old-Age, Survivors, and Disability Insurance) — this shows 6.2% of your gross pay up to the annual cap. Below that, you'll see "Medicare" or "Med" at 1.45%. Some pay stubs also show "Medicare Additional" or "Additional Med Tax" if you've crossed the high-income threshold.

Your employer's matching contributions don't appear on your pay stub because they're paid separately. However, they're still part of your total compensation and count toward your Social Security and Medicare records. Self-employed workers report these taxes on Schedule SE when they file their annual tax return.

What happens if you work past full retirement age

You continue paying Social Security and Medicare tax on your wages no matter how old you are, even if you're already receiving Social Security benefits. There's no age at which the tax stops. However, if you're working and receiving Social Security before your full retirement age, your benefits may be reduced temporarily — but the tax you pay still counts toward your record and can increase your future benefit amount.

Many people continue working past 65 and delay claiming Social Security to increase their monthly benefit. During those working years, you're still paying into both programs. The longer you wait to claim (up to age 70), the higher your monthly benefit will be.

Self-employed workers and these taxes

If you're self-employed, you pay both the employee and employer portions of Social Security and Medicare tax through self-employment tax. This totals 15.3% — 12.4% for Social Security (up to the income cap) and 2.9% for Medicare. You report this on Schedule SE and pay it along with your income tax.

The good news: you can deduct half of your self-employment tax as a business expense on your tax return, which reduces your taxable income. The Social Security income cap still applies, so once you've paid on $168,600 of net self-employment income in 2024, no more Social Security tax is due on additional earnings that year.

Frequently Asked Questions

What if I work two jobs and pay Social Security tax twice?

If your combined earnings from multiple jobs exceed the Social Security cap, you may overpay. You can claim a credit for the overpayment on your tax return (Form 1040). The IRS will refund the excess when you file, usually within a few weeks of processing.

Does the Social Security tax rate ever change?

The 6.2% rate has been stable since 1990. Congress would need to pass new legislation to change it. The income cap adjusts annually based on national wage trends, but the percentage itself remains the same unless lawmakers act.

Can I opt out of Social Security or Medicare tax?

No. These taxes are mandatory for all workers and self-employed individuals in the United States. There are no exemptions based on age, income, or personal choice. Even if you don't plan to use Medicare or Social Security, the tax is still required.

Why do I pay Medicare tax if I'm not 65 yet?

You're funding the current Medicare system for people who are already 65 and older. In return, when you reach 65, future workers' Medicare taxes will help fund your coverage. It's a pay-as-you-go system where each generation supports the one receiving benefits.

Does my employer's matching tax affect my Social Security benefit?

No. Your Social Security benefit is based only on the wages you earned and the employee tax you paid, not on what your employer contributed. However, the employer contribution is still part of the total funding that keeps the program running.