The Social Security Tax Rate and How It Works

Social Security tax takes 6.2 percent of your wages, and your employer matches that with another 6.2 percent. If you are self-employed, you pay both sides — 12.4 percent total — on your net business income. This 12.4 percent combined rate has been the same since 1990.

The tax only applies to earnings up to a certain limit, which changes each year. For 2024, you stop paying Social Security tax once your wages reach $168,600. In 2025, that limit is $176,100. Once you hit that cap, no more Social Security tax comes out of your paycheck for the rest of the year, even if you earn more.

Your employer withholds your 6.2 percent automatically from each paycheck. You will see it listed as "OASDI" (Old-Age, Survivors, and Disability Insurance) or "Social Security" on your pay stub. The money goes into a federal trust fund that pays benefits to retirees, disabled workers, and survivors of deceased workers.

Key Takeaways

  • You pay 6.2 percent of your wages in Social Security tax, and your employer pays another 6.2 percent on your behalf.
  • Self-employed people pay the full 12.4 percent on their net business income because they are both employee and employer.
  • The tax only applies to earnings below an annual cap, which was $168,600 in 2024 and $176,100 in 2025.
  • Once you reach the annual earnings cap, Social Security tax stops coming out of your paycheck for that year.

How the Tax Appears on Your Pay Stub

Look for a line item labeled "Social Security," "OASDI," or "6.2%" on your pay stub. The amount shown is 6.2 percent of your gross wages for that pay period. If you are paid weekly, that is 6.2 percent of one week's pay. If you are paid biweekly, it is 6.2 percent of two weeks' pay.

Your employer's matching 6.2 percent does not appear on your pay stub — it is a separate cost your employer reports to the IRS. You only see your own 6.2 percent deducted from your take-home pay. Both amounts go to the same Social Security trust fund.

What Happens When You Reach the Earnings Cap

Once your total wages for the year hit the cap ($168,600 in 2024, $176,100 in 2025), your employer stops withholding Social Security tax from your paychecks. If you change jobs mid-year and your new employer does not know about your previous earnings, you might overpay. You can claim a refund of the overpayment when you file your tax return.

High earners and people who work multiple jobs are most likely to hit the cap. If you earn $200,000 in a single job, you will pay Social Security tax on only the first $168,600 (in 2024). The remaining $31,400 is not subject to Social Security tax, though it may be subject to Medicare tax.

Self-Employed Social Security Tax

If you are self-employed, you pay both the employee and employer portions of Social Security tax. That means 12.4 percent of your net self-employment income, up to the annual cap. You calculate this on Schedule SE (Self-Employment Tax) when you file your tax return.

Self-employed people can deduct half of their self-employment tax as a business expense on their tax return. This reduces your taxable income but does not reduce the amount of Social Security tax you owe. You still pay the full 12.4 percent to the Social Security trust fund.

Why the Cap Exists and How It Changes

Congress set the earnings cap to keep Social Security funded. The cap rises each year based on the average wage growth in the country. The Social Security Administration announces the new cap in October for the following year. This is why the cap was $168,600 in 2024 and $176,100 in 2025.

The cap applies only to Social Security tax. Medicare tax, which is 1.45 percent on your wages, has no cap — you pay it on all your earnings no matter how much you make. High earners also pay an additional 0.9 percent Medicare tax on wages above $200,000 (single filers) or $250,000 (married filing jointly).

How Social Security Tax Differs From Income Tax

Social Security tax and federal income tax are two separate deductions from your paycheck. Social Security tax is a flat 6.2 percent with an earnings cap. Federal income tax varies based on your tax bracket, filing status, and the number of dependents you claim on your W-4 form.

Social Security tax funds only the Social Security program. Federal income tax funds general government operations. You will see both listed separately on your pay stub. Some states also collect state income tax, which is a third separate deduction.

Frequently Asked Questions

Do I pay Social Security tax on tips and bonuses?

Yes. Tips and bonuses count as wages and are subject to the 6.2 percent Social Security tax, up to the annual cap. Your employer should withhold Social Security tax on all forms of compensation you receive.

What if I work for two employers in the same year?

Each employer withholds 6.2 percent based on what they pay you, without knowing about your other job. You might pay more than the cap allows. When you file your tax return, you can claim a refund for any overpayment of Social Security tax.

Do government employees pay Social Security tax?

Most do, but some federal, state, and local government workers are covered by different pension systems instead. If you work for the government, check with your payroll office about whether Social Security tax applies to your wages.

Does Social Security tax come out of my 401(k) contributions?

Yes. Social Security tax is withheld on your gross pay before 401(k) contributions are taken out. Your 401(k) contributions reduce your federal income tax but not your Social Security tax.

Can I opt out of paying Social Security tax?

No. Social Security tax is mandatory for all employees and self-employed people with earned income. There is no option to stop paying it or redirect the money elsewhere.