Social Security Tax

Social Security tax is a payroll tax that is used to fund the Social Security program, which provides retirement, disability, and survivor benefits to eligible individuals in the U.S. The tax is levied on earned income, and both employees and employers are responsible for paying it. As of 2024, the Social Security tax rate is 6.2% for employees and 6.2% for employers, for a total of 12.4%. This tax is applied to wages up to a certain annual limit, known as the “Social Security wage base.” Once an individual’s income exceeds this limit, no further Social Security tax is taken for the remainder of the year. Self-employed individuals pay the full 12.4% but can deduct the employer’s portion on their tax return.