The Social Security tax is a payroll tax that funds the U.S. Social Security system (OASDI: Old-Age, Survivors, and Disability Insurance).
In 2025, the Social Security tax rate and income limits are set by federal law.
Understanding how the Social Security tax works can help you know what to expect in deductions, what your employer pays, and how self-employment changes things.
What is the Social Security tax?
The Social Security tax is a mandatory contribution from wages or net self-employment income to support Social Security programs.
Under the Federal Insurance Contributions Act (FICA) for employees, and the Self-Employment Contributions Act (SECA) for self-employed persons, these taxes finance benefits paid to retirees, disabled individuals, and survivors.
What is the Social Security tax rate in 2025?
In 2025, the Social Security tax rate is 6.2 percent for employees on wages covered by Social Security, and 6.2 percent for employers on the same wages, so together a total of 12.4 percent when combining both shares.
For self-employed individuals, who effectively act as both employee and employer, the Social Security tax rate is the full 12.4 percent.
How much income is subject to the Social Security tax?
Not all income is taxed. The Social Security tax applies only to wages up to a certain annual ceiling, known as the “taxable maximum.” In 2025, that ceiling is $176,100.
This means earnings above $176,100 are not subject to the Social Security portion of FICA.
How much Social Security tax do high earners pay in 2025?
If your wage is at or above the 2025 cap of $176,100, you will pay 6.2 percent of that amount toward Social Security as an employee, which is $10,918.20.
Your employer pays the same amount on top.
A self-employed person at that level would pay 12.4 percent on $176,100, which is also $21,836.40 in Social Security taxes for the year (before deductions).
Are there exemptions or special rules for the Social Security tax?
Yes, there are certain exceptions:
- Income types that are not subject to the Social Security tax include pension payments, investment income, interest, and most retirement plan distributions.
- Some religious groups, nonresident aliens, or persons covered by a foreign social security system may qualify for exemptions (depending on treaty provisions).
- Students working for their college or university under certain conditions might be exempt if the institution qualifies.
- For self-employed persons, they can deduct the “employer share” of their Social Security tax as a business expense when calculating adjusted gross income.
What happens when your Social Security tax is withheld?
When you are employed, your employer withholds the Social Security tax from your paycheck, along with Medicare tax, and submits both your share and their share to the IRS.
These funds go into the OASDI (Old Age, Survivors, Disability Insurance) trust funds.
If you are self-employed, you must report your net earnings and pay estimated self-employment taxes, which include both Social Security and Medicare components.
Has anything changed recently about Social Security taxation?
Yes. A major development is the One Big, Beautiful Bill (OBBB) signed in 2025, which includes tax relief for seniors.
Under this law, nearly 90 percent of Social Security beneficiaries will no longer owe federal income tax on their Social Security benefits.
This change affects how Social Security income is taxed at the federal level, not the Social Security tax itself.
Also, the Social Security Fairness Act, enacted in January 2025, repealed the Government Pension Offset and Windfall Elimination Provision, which had reduced benefits for some public employees.
