Most workers pay Social Security tax, but some groups are exempt

Yes, most people who work have to pay Social Security tax. It comes out of your paycheck automatically — 6.2% of your wages up to a yearly cap. Your employer pays another 6.2% on your behalf. If you're self-employed, you pay both parts yourself, which comes to 12.4%.

But not everyone pays it. Some workers are exempt by law, and a few groups pay into a different system instead. Understanding which category you fall into matters because it affects what you'll receive later and what you owe now.

Key Takeaways

  • Most employees and self-employed people pay 6.2% Social Security tax on wages, with a yearly earnings cap that changes each year.
  • Federal, state, and local government employees hired before specific dates often pay into their own pension systems instead and do not pay Social Security tax.
  • Certain religious groups with a history of self-support, some nonresident aliens, and students working for their school may be exempt from Social Security tax.
  • If you work for an employer that does not withhold Social Security tax, you should verify whether you're truly exempt or whether the employer is breaking the law.

Government employees and their pension systems

Many federal, state, and local government workers do not pay Social Security tax because they belong to their own retirement systems. A federal employee hired before 1984 typically pays into the Civil Service Retirement System (CSRS) instead. Federal employees hired in 1984 or later usually pay into the Federal Employees Retirement System (FERS), which does include Social Security contributions.

State and local government workers follow similar rules. If you were hired before your state's cutoff date — which varies by state — you may pay into a state pension system only. If you were hired after that date, you likely pay both Social Security tax and into the state system. The exact rules depend on your employer and when you were hired, so check with your human resources or payroll department to know for certain.

This matters because people in these systems typically receive a pension instead of Social Security, or they receive a reduced Social Security benefit. If you're unsure whether you pay Social Security tax, your pay stub will show it clearly — look for "Social Security" or "OASDI" (Old-Age, Survivors, and Disability Insurance).

Religious groups and self-support communities

Members of certain religious groups that have a history of providing for their own members may be exempt from Social Security tax. The group must be recognized by the IRS, have a sincere religious objection to accepting public insurance, and have a demonstrated history of taking care of its own members. The Amish and some Mennonite communities are the most common examples.

To claim this exemption, the individual must file Form 4029 with the IRS before the tax year in which they want the exemption to take effect. Once approved, they do not pay Social Security tax and do not receive Social Security benefits later. This is a permanent choice — you cannot switch back and forth.

Students, nonresident aliens, and other narrow exemptions

A student who works for the school or university that employs them as a student may be exempt from Social Security tax on those wages only. The exemption applies to the student job itself, not to other work the student does. Once you graduate or stop working for the school, you pay Social Security tax on all other employment.

Nonresident aliens on certain visa types — such as F-1 student visas, J-1 exchange visitor visas, or M-1 vocational student visas — do not pay Social Security tax on wages earned while in the United States on that visa. However, they may still owe U.S. income tax. Once someone becomes a resident alien or changes visa status, the exemption ends.

Family members who work for a family business may also be exempt in limited situations. A child under 18 working for a parent's sole proprietorship or partnership does not pay Social Security tax on those wages. A spouse working for a spouse's sole proprietorship is also exempt. These exemptions end when the worker reaches a certain age or when the business structure changes.

What happens if your employer does not withhold Social Security tax

If your pay stub does not show Social Security tax being withheld and you do not fall into one of the exempt categories above, your employer may be breaking the law. This is a serious problem because it means you are not building a record of earnings toward Social Security benefits.

Contact your employer's payroll or human resources department first and ask directly why Social Security tax is not being withheld. Bring your pay stub. If they cannot give you a clear answer or claim you are exempt when you do not believe you are, you can file a report with the Internal Revenue Service (IRS) using Form 13909 (online at irs.gov) or call the IRS at 1-800-829-1040.

You can also contact the Social Security Administration at 1-800-772-1213 to report the issue and ask them to investigate your earnings record. Keep copies of your pay stubs as evidence. The longer this goes on, the more your future Social Security benefit could be affected.

Self-employed people and the self-employment tax

If you are self-employed, you pay both the employee and employer portions of Social Security tax combined — 12.4% — on your net business income. This is called self-employment tax. You pay it when you file your annual income tax return using Schedule SE.

However, not all self-employed income is subject to self-employment tax. If you are self-employed but your net earnings from self-employment are less than $400 in a year, you do not owe self-employment tax. You still may owe income tax, but not the Social Security portion. Once your net self-employment income reaches $400 or more, you must pay self-employment tax on the full amount.

If you have both a regular job and self-employment income, you pay Social Security tax on both. However, there is a yearly earnings cap — in 2024, you pay Social Security tax only on earnings up to $168,600. Once you reach that cap through your regular job, you do not pay Social Security tax on additional self-employment income that year, though you still pay Medicare tax on all self-employment income.

The yearly earnings cap and how it affects you

Social Security tax applies only to earnings up to a certain amount each year. That cap changes annually and is tied to wage growth in the economy. In 2024, the cap is $168,600. In 2025, it is $176,100. You can find the current year's cap on the Social Security Administration website or on your Social Security statement.

This means if you earn $200,000 in a year, you pay Social Security tax only on the first $176,100 (in 2025). The income above that is not subject to Social Security tax. However, Medicare tax — the other payroll tax on your check — does not have a cap and applies to all wages.

If you work for more than one employer in the same year, each employer withholds Social Security tax up to the cap independently. If your combined earnings exceed the cap, you may have overpaid Social Security tax. You can claim a refund of the overpayment when you file your income tax return.

Frequently Asked Questions

Can I opt out of paying Social Security tax?

No, unless you fall into a specific exempt category. You cannot straightforward choose not to pay. The only way to be exempt is to be part of a recognized religious group with an IRS-approved exemption, work for a government employer with its own pension system, or fall into one of the narrow categories like student employment or nonresident alien status.

If I do not pay Social Security tax, can I collect Social Security later?

No. Social Security benefits are based on your earnings record. If you do not pay into the system, you do not build credits toward benefits. Government employees in pension systems and members of exempt religious groups do not receive Social Security benefits — they receive pensions or rely on their community instead.

What is the difference between Social Security tax and Medicare tax?

Social Security tax is 6.2% (or 12.4% if self-employed) and funds retirement, disability, and survivor benefits. Medicare tax is 1.45% (or 2.9% if self-employed) and funds hospital insurance. Both come out of your paycheck, but they fund different programs. Medicare tax has no yearly earnings cap.

Do I pay Social Security tax on tips?

Yes. Tips are considered wages and are subject to Social Security tax. Your employer should withhold Social Security tax based on the tips you report. If you receive cash tips that your employer does not know about, you are still legally required to report them and pay tax on them.

What if I worked for a government employer and now work in the private sector?

You now pay Social Security tax on your private-sector wages. Your government pension and Social Security benefits may be affected by a rule called the Government Pension Offset or Windfall Elimination Provision, which can reduce your Social Security benefit if you also receive a government pension. Contact Social Security to understand how your specific situation works.