Every working person in the United States pays Social Security tax, which funds the benefits that retirees, disabled individuals, and survivors receive.
This tax is part of the Federal Insurance Contributions Act (FICA) and is automatically taken out of most paychecks.
Understanding how it works helps you know what you’re contributing to and what you can expect later.
What is the purpose of the Social Security tax?
Social Security tax provides the money that pays monthly benefits to retirees, disabled workers, and survivors of deceased workers.
The Social Security Administration (SSA) uses these taxes to fund the Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) trust funds.
In short, your tax contributions today fund the benefits of current recipients, while future workers’ taxes will fund yours when you retire.
How much is the Social Security tax rate in 2025?
As of 2025, the Social Security tax rate remains 6.2 % for employees and 6.2 % for employers, for a total of 12.4 % of taxable wages. (irs.gov)
If you’re self-employed, you pay both portions yourself, a total of 12.4 %, under the Self-Employment Contributions Act (SECA).
You can deduct half of that amount as an adjustment to income when filing taxes.
What is the maximum taxable earnings limit?
There is a limit to how much of your income is subject to Social Security tax, known as the taxable wage base.
In 2025, that limit is $168,600, up from $160,200 in 2023.
This means any earnings above $168,600 in 2025 are not taxed for Social Security purposes.
However, all earnings are subject to Medicare tax, which is separate and has no cap.
What happens if you have more than one job?
If you work for multiple employers during the year, you might have Social Security tax withheld from each job, possibly exceeding the annual limit.
When you file your tax return, the IRS refunds any excess Social Security tax paid due to having multiple jobs.
How is Social Security tax different from Medicare tax?
Although both are FICA taxes, the Social Security and Medicare funds are separate programs.
- Social Security tax (6.2 %) funds retirement, disability, and survivor benefits.
- Medicare tax (1.45 %) funds hospital insurance (Part A) for those aged 65 and older.
High-income earners also pay an additional 0.9 % Medicare surtax on wages over $200,000 for single filers or $250,000 for joint filers.
How do self-employed people pay Social Security tax?
Self-employed workers pay Social Security tax through their quarterly estimated tax payments or annual return using Schedule SE.
The combined 12.4 % rate applies to net earnings from self-employment up to the same wage base limit ($168,600 in 2025).
The IRS allows self-employed individuals to deduct half of their Social Security tax when calculating adjusted gross income, helping offset the extra cost of paying both sides.
What benefits does paying Social Security tax provide?
Paying Social Security tax builds your work credits, which determine your eligibility for benefits later in life.
In 2025, you earn one credit for every $1,730 in earnings, up to a maximum of four credits per year.
Generally, you need at least 40 credits (about ten years of work) to qualify for retirement benefits.
These same credits also help determine disability or survivor benefit eligibility for your family if you die.
Can the Social Security tax rate change in the future?
The Social Security tax rate has remained the same since 1990, but changes are possible if the program faces funding shortfalls.
The 2025 Trustees Report projected that the combined trust fund could be depleted by 2035 if no legislative action occurs.
Congress could respond by raising the tax rate, increasing the wage base, or modifying benefits.
For now, the 6.2 % rate remains unchanged, but ongoing discussions about long-term solvency make future adjustments likely.
