The Social Security tax rate is 6.2% of your wages, taken from your paycheck

Social Security tax comes out of your paycheck at a flat rate of 6.2% of your gross wages. If you are self-employed, you pay both the employee and employer portions, which totals 12.4%. The tax applies only to earnings up to a certain cap — in 2024, that cap is $168,600, meaning you stop paying Social Security tax once your annual wages reach that amount.

Your employer withholds the 6.2% automatically and sends it to the Social Security Administration along with their matching 6.2% contribution. Self-employed workers report and pay both portions when they file their tax return. The money goes into the Social Security trust fund, which pays benefits to retirees, disabled workers, and survivors of deceased workers.

Key Takeaways

  • Employees pay 6.2% of gross wages in Social Security tax; self-employed workers pay 12.4% total.
  • The tax only applies to earnings below the annual wage cap, which changes each year.
  • Your employer withholds the employee portion and contributes a matching amount.
  • Self-employed workers report Social Security tax on Schedule SE when filing their federal return.

How the wage cap affects what you pay

Not all of your income is subject to Social Security tax. The government sets an annual wage cap — the maximum amount of earnings that can be taxed for Social Security in a given year. Once your wages reach that cap, no more Social Security tax is withheld from your paychecks for the rest of that year.

The wage cap increases most years to account for inflation. In 2024, the cap is $168,600. In 2023, it was $160,200. In 2022, it was $147,000. If you earn $200,000 in a year, you pay the 6.2% tax only on the first $168,600 of that income — not on the remaining $31,400. High earners and those with multiple jobs should track their total earnings across all employers to avoid overpaying.

What happens if you work for multiple employers

If you hold more than one job in the same year, each employer withholds 6.2% Social Security tax from your wages independently. This means you could pay more than the required amount if your combined earnings from all jobs exceed the wage cap.

For example, if you earn $100,000 at one job and $80,000 at another, your total is $180,000. The first employer withholds 6.2% on all $100,000. The second employer withholds 6.2% on all $80,000. But the wage cap is $168,600, so you have overpaid by $7,400 × 6.2% = $458.80. You can claim a credit for the overpayment when you file your federal income tax return — you do not need to contact Social Security.

Self-employed workers and the full 12.4% rate

If you are self-employed, you owe both the employee and employer portions of Social Security tax. That totals 12.4% of your net self-employment income. You report this on Schedule SE when you file your federal tax return, and the amount carries over to your Form 1040.

Self-employed income is calculated after you subtract business expenses. The IRS allows you to deduct half of your self-employment tax as a business expense on your Form 1040, which reduces your overall tax burden slightly. Like employees, self-employed workers are also subject to the annual wage cap — once your net self-employment income reaches the cap, you stop owing Social Security tax on additional earnings that year.

How Social Security tax differs from Medicare tax

Social Security tax and Medicare tax are separate payroll taxes, though they often appear together on your pay stub. Social Security tax is 6.2% (or 12.4% self-employed) and applies only to earnings below the wage cap. Medicare tax is 2.9% (or 5.8% self-employed) and has no wage cap — it applies to all of your earnings, no matter how much you make.

High earners also pay an additional 0.9% Medicare tax on wages above $200,000 (single filers) or $250,000 (married filing jointly). This extra tax was introduced in 2013 and has no cap. So if you earn $300,000 as a single filer, you pay the standard 2.9% Medicare tax on all $300,000, plus an extra 0.9% on the $100,000 above the $200,000 threshold.

Why the rate has stayed the same since 1990

The 6.2% employee Social Security tax rate has not changed since 1990. Congress set it at that level and has kept it there through multiple rounds of Social Security reform discussions. The rate was lower in the past — it started at 1% in 1937 and gradually increased as the program expanded to cover more workers and pay more benefits.

The employer matching rate has also remained at 6.2% since 1990. During the 2010–2012 payroll tax cut, employees temporarily paid 4.2% instead of 6.2%, but that was a temporary reduction that expired. The current 6.2% rate is the standard that applies to most workers today.

Frequently Asked Questions

Does Social Security tax explore to tips and bonuses?

Yes. Tips and bonuses are treated as wages and are subject to the 6.2% Social Security tax, just like your regular salary. Your employer should include them in your gross income for payroll tax purposes. If you receive tips that your employer does not report, you are still required to report them to Social Security and pay tax on them.

What if I earn income that is not from a job?

Social Security tax applies only to wages from employment and net self-employment income. Income from investments, rental property, or interest does not trigger Social Security tax. However, if you are self-employed and earn money from a business, that net income is subject to the 12.4% self-employment tax.

Can I opt out of paying Social Security tax?

No. Social Security tax is mandatory for all employees and self-employed workers. The only exceptions are certain government employees who are covered by a different retirement system, and some religious groups that have received a formal exemption from the IRS. Most workers cannot opt out.

Does the wage cap reset each year?

Yes. The wage cap resets on January 1 each year and is based on the average wage index from two years prior. Once you reach the cap in a calendar year, you stop paying Social Security tax. If you change jobs or have a gap in employment, the cap does not reset — it applies to your total earnings across all employers in that calendar year.