What You Pay Into Social Security and Medicare

Social Security and Medicare taxes are withheld from your paycheck at fixed rates set by federal law. For 2024, you pay 6.2 percent of your wages into Social Security, up to a maximum income threshold of $168,600. You pay 1.45 percent of all your wages into Medicare, with no income cap. If you are self-employed, you pay both the employee and employer portions — 12.4 percent for Social Security and 2.9 percent for Medicare — though you can deduct half of the self-employment tax when you file your income tax return.

Your employer matches the amount you pay into both programs. That match does not appear on your paycheck, but it is part of your total compensation. Together, the employee and employer contributions fund the Social Security retirement, disability, and survivor benefits system, and the Medicare hospital insurance program (Part A).

Key Takeaways

  • Employees pay 6.2 percent into Social Security on wages up to $168,600 in 2024, and employers match that amount.
  • Employees pay 1.45 percent into Medicare on all wages with no upper limit, and employers match that amount.
  • Self-employed workers pay both the employee and employer portions: 12.4 percent for Social Security and 2.9 percent for Medicare.
  • An additional 0.9 percent Medicare tax applies to high earners — individuals making over $200,000 or married couples filing jointly over $250,000.
  • These rates have been set by law since 1990 and do not change year to year, though the Social Security wage base threshold increases annually.

How the Social Security Wage Base Works

The Social Security tax rate of 6.2 percent applies only to earnings below a certain threshold, called the wage base. In 2024, that threshold is $168,600. Once your wages reach that amount in a calendar year, no more Social Security tax is withheld from your paychecks for the rest of that year.

The wage base increases each year based on changes in average national wages. It was $160,200 in 2023 and $168,600 in 2024. If you change jobs during the year, each employer withholds Social Security tax independently up to the threshold, so it is possible to overpay if you earn above the wage base at multiple jobs. You can claim a refund of the overpayment on your federal income tax return.

Medicare tax, by contrast, has no wage base limit. You pay 1.45 percent on every dollar you earn, no matter how high your income goes.

The Additional Medicare Tax for High Earners

If your income exceeds certain thresholds, you owe an additional Medicare tax of 0.9 percent on the amount over the limit. For single filers, the threshold is $200,000. For married couples filing jointly, it is $250,000. For married individuals filing separately, it is $125,000.

Your employer is required to withhold this additional tax once your wages exceed the threshold in a calendar year. If you have multiple jobs or other income sources, you may owe more than what was withheld, and you will settle the difference when you file your tax return. Self-employed individuals calculate and pay this tax themselves as part of their self-employment tax.

Self-Employment Tax Rates

If you are self-employed, you pay both the employee and employer share of Social Security and Medicare taxes combined. This is called self-employment tax. The rate is 15.3 percent total: 12.4 percent for Social Security (on net earnings up to $168,600 in 2024) and 2.9 percent for Medicare (on all net earnings).

You calculate self-employment tax on your net business income — your gross income minus business expenses — reported on Schedule C of your tax return. You then pay this tax using Form SE (Self-Employment Tax). The IRS allows you to deduct half of your self-employment tax as an adjustment to income, which reduces your taxable income for federal income tax purposes.

If your net self-employment income exceeds $200,000 (single) or $250,000 (married filing jointly), you also owe the additional 0.9 percent Medicare tax on the excess amount.

Why These Rates Exist and What They Fund

Social Security and Medicare taxes are payroll taxes dedicated to specific federal programs. The 6.2 percent Social Security tax funds retirement benefits for workers age 62 and older, disability benefits for workers under full retirement age, and survivor benefits for the families of deceased workers. The 1.45 percent Medicare tax funds Part A hospital insurance, which covers inpatient hospital stays, skilled nursing facility care, and some home health services.

These tax rates have remained unchanged since 1990. Congress sets the rates by law and can change them only through legislation. The rates are not adjusted for inflation or economic conditions — they stay the same regardless of the year.

How to Verify Your Tax Withholding

You can check how much Social Security and Medicare tax has been withheld from your pay by reviewing your pay stub. Look for lines labeled "Social Security" or "FICA Social Security" and "Medicare" or "FICA Medicare." Your employer should withhold the correct amounts automatically based on your gross pay.

At the end of the year, your employer sends you a Form W-2, which shows your total wages and the total Social Security and Medicare taxes withheld. Box 4 shows Social Security tax withheld, and Box 6 shows Medicare tax withheld. Compare these amounts to your pay stubs to make sure they match. If you worked for multiple employers or had other income, your tax return is where you reconcile any overpayment or underpayment.

If you believe your withholding is incorrect, contact your employer's payroll department or the IRS at 1-800-829-1040.

Frequently Asked Questions

Why do I pay Social Security tax on only part of my income?

Congress set a wage base limit for Social Security to balance the program's funding with the income needs of high earners. The limit has increased over time as wages have risen. Medicare has no limit because it is designed to cover all workers equally regardless of income.

Can I opt out of Social Security or Medicare taxes?

No. These taxes are mandatory for all employees and self-employed individuals. The only exception is certain members of religious groups who have received an IRS exemption, which is rare and requires specific approval.

What happens if my employer does not withhold these taxes?

Your employer is legally required to withhold and remit Social Security and Medicare taxes. If this does not happen, contact the IRS at 1-800-829-1040 or file Form SS-8 if you believe you have been misclassified as an independent contractor instead of an employee.

Do I pay these taxes on tips and bonuses?

Yes. Social Security and Medicare taxes explore to all wages, including tips you report to your employer and bonuses. Your employer withholds these taxes the same way as on regular pay.

How do I know if I owe the additional Medicare tax?

If your income exceeds $200,000 (single), $250,000 (married filing jointly), or $125,000 (married filing separately), you owe an additional 0.9 percent Medicare tax on the excess. Your employer should withhold this automatically once you cross the threshold, but you may owe more or less when you file your return depending on your total income from all sources.