Who Has To Pay Social Security Taxes
Most people who work in the United States pay Social Security taxes automatically through payroll deduction. Your employer withholds 6.2% of your wages for Social Security, and you pay another 6.2% yourself — the employer match is not optional. If you are self-employed, you pay both portions yourself, totaling 12.4%, when you file your annual tax return.
The requirement applies to almost all jobs: W-2 employees, hourly workers, salaried staff, and self-employed people. There are narrow exceptions. Federal employees hired before 1984 do not pay into Social Security. Railroad workers pay into a separate system called the Railroad Retirement Board. Some state and local government employees — particularly teachers and public safety workers in certain states — may have opted out of Social Security and instead pay into their own pension systems.
If you are not sure whether your job requires Social Security contributions, check your pay stub. It will show a line item labeled "Social Security" or "OASDI" (Old-Age, Survivors, and Disability Insurance). If that line appears and money is being deducted, you are paying in.
Key Takeaways
- Most workers pay 6.2% of their wages into Social Security through automatic payroll deduction, and their employer pays an equal 6.2%.
- Self-employed people pay the full 12.4% themselves when they file taxes, but can deduct half of it as a business expense.
- Federal employees hired before 1984, railroad workers, and some state and local government workers may be exempt from Social Security taxes.
- You cannot opt out of Social Security taxes if your job requires them — the deduction is mandatory for covered employment.
- Paying into Social Security for at least 40 quarters (10 years) of work makes you may be able to access to receive benefits later in life.
What Happens If You Do Not Pay In
If you work in a job that is covered by Social Security and your employer is required to withhold taxes, you cannot choose not to pay. The deduction is mandatory. If an employer fails to withhold Social Security taxes from your paycheck, that is a violation of federal law, and you should report it to the Internal Revenue Service.
If you have never worked in a covered job — for example, if you worked only for an exempt employer or were self-employed but did not file taxes — you will not have earned Social Security credits. Without credits, you will not be able to receive Social Security retirement, survivor, or disability benefits based on your own work record. You may still be able to receive benefits as a spouse or dependent of someone else who paid in, but the amount will be smaller.
How Many Years You Need To Pay In
Social Security uses a credit system. You earn one credit for each $1,640 of wages you earn in a year (this amount changes annually). You can earn a maximum of four credits per year. To be may be able to access for retirement benefits, you need 40 credits total, which typically means 10 years of work.
The credits do not have to be consecutive. If you worked for five years, then took time off, then worked again for five years, you would have 40 credits and be may be able to access. The only requirement is that you earned enough in covered employment to accumulate the credits. For disability or survivor benefits, you may need fewer credits depending on your age when you become disabled or die.
You can check how many credits you have earned by creating an account on the Social Security Administration website and viewing your statement. This statement also shows an estimate of what your benefits might be at different ages.
Self-Employed Workers and Social Security Taxes
If you are self-employed, you pay Social Security taxes through the self-employment tax on your annual tax return. The rate is 12.4% for Social Security (plus 2.9% for Medicare). You calculate this based on your net business income after deducting business expenses.
Self-employed people can deduct half of their self-employment tax as a business expense on their tax return, which reduces their overall tax burden. You must file a Schedule SE (Self-Employment Tax) with your Form 1040 to report and pay these taxes. If you have net self-employment income of $400 or more in a year, you are required to file.
Many self-employed people miss filing years or underreport income, which means they do not earn credits for those years. Each year you do not file, you lose the opportunity to earn up to four credits. This can delay your may be able to access for benefits or reduce your benefit amount later.
Government Employees and Special Cases
Federal employees hired on or after January 1, 1984 pay into Social Security like other workers. Those hired before that date typically do not, because they were covered by the Civil Service Retirement System instead. Some of these older federal employees may receive a reduced Social Security benefit if they also worked in covered employment at another time.
State and local government employees — such as teachers, police officers, and firefighters — sometimes work under pension systems that are separate from Social Security. In these cases, the employer does not withhold Social Security taxes. However, if you work multiple jobs and one of them is not covered by Social Security, you still pay into Social Security from your other covered job.
If you have a pension from work not covered by Social Security, your Social Security benefit may be reduced under rules called the Government Pension Offset or the Windfall Elimination Provision. These rules are complex and depend on when you were born and how much your pension is. The Social Security Administration can explain how these rules affect your specific situation.
What Your Payments Go Toward
Social Security taxes fund four separate programs: retirement benefits, disability insurance, survivor benefits, and Medicare. The 6.2% you pay (or 12.4% if self-employed) covers all four. You do not choose where your money goes — it goes into a single trust fund that pays current beneficiaries.
Social Security is not a savings account in your name. It is a pay-as-you-go system: taxes collected today pay benefits to people receiving benefits today. Your future benefits will be paid by taxes collected from future workers. The amount you receive in retirement is based on your earnings record and the age at which you start taking benefits, not on how much you paid in.
Frequently Asked Questions
Can I get my Social Security taxes back if I do not work long enough to be may be able to access?
No. If you do not earn 40 credits, you cannot receive retirement benefits based on your own work record, and you do not get a refund of the taxes you paid. However, if you are a spouse or dependent of someone who did earn 40 credits, you may still be able to receive benefits based on their record.
What if I worked in another country — does that count toward Social Security?
Work in another country generally does not count toward Social Security unless the United States has a totalization agreement with that country. These agreements allow you to combine credits from both countries to reach the 40-credit threshold. The Social Security Administration maintains a list of countries with these agreements.
Do I have to pay Social Security taxes on all my income?
No. There is a wage cap: in 2024, you only pay Social Security tax on the first $168,600 of earnings. Income above that amount is not subject to the 6.2% Social Security tax (though it is still subject to Medicare tax). This cap changes each year.
What if my employer did not withhold Social Security taxes — am I still covered?
If your employer failed to withhold, you are not covered for that year, and you will not earn credits. Report this to the IRS when ready. Your employer is breaking the law, and the IRS can investigate and require them to pay back taxes on your behalf.
Can I opt out of Social Security and invest the money myself instead?
No. Social Security is mandatory for all covered workers. You cannot choose to stop paying in or to receive a lump sum instead of monthly benefits. The system is designed as insurance, not as an investment account you control.