Social Security Taxes

Most employees, employers, and self-employed individuals are required to pay the Social Security tax, which is a portion of gross wages, in order to support the federal programme. For a number of taxpayer categories, the social security tax is exempted.. Employers are responsible for deducting the appropriate amount of Social Security tax from each employee's paycheck and sending it to the federal government on time. If you act differently, there can be severe consequences.

Workings Of Social Security Tax

Both workers and self-employed taxpayers are subject to the Social Security tax on their income. Usually, employers deduct this tax from employees' paychecks and send it to the government. Instead of being placed in a trust for the specific employee who is now contributing to the fund, the money collected from employees for Social Security is used to compensate existing older individuals under a "pay-as-you-go" approach.

Moreover, Social Security taxes are taken out to help people who are entitled to survivorship benefits, which are payments made to a surviving spouse after the death of a spouse or to a dependent child after the death of a parent.

The Social Security tax rate will be 12.4% in 2022. Employers are responsible for paying half of the tax, or 6.2%, and employees are in charge of paying the remaining 0.5%. All forms of income that an employee receives, including as salary, wages, and bonuses, are subject to the Social Security tax rate.

Social Security Tax For The Self-Employed

Also deducted from self-employed individuals' wages is the Social Security tax. The whole 12.4% Social Security tax must be paid by a self-employed person since the Internal Revenue Service (IRS) views them as both an employer and an employee.

All net earnings are subject to the Social Security tax up to the wage threshold. The self-employment tax is made up of Social Security and Medicare levies. (12.4% Social Security tax plus 2.9% Medicare tax).

Only 92.35% of net company earnings are subject to the self-employment tax.

Exemptions For Social Security

The Social Security tax is not mandatory for all taxpayers. Some categories of people are eligible for exemptions, including:

  • Religious group members that oppose obtaining Social Security benefits in retirement, in the event of disability, or after death
  • Non-resident aliens, or those who are visiting the US temporarily as students but are neither citizens nor permanent residents,
  • Non-resident aliens working in the U.S. for a foreign government
  • Students who work at the same school where they attend and whose job is reliant on their ongoing enrolment.


Social Security taxes pay for the retirement, disability, and survivorship benefits that the Social Security Administration delivers to millions of Americans each year.

The Social Security tax rate is 12.4% in 2022 ($160,200 in 2023), split equally between employers and employees, on a maximum pay base of $147,000.

Self-employed people only pay the employer and employee components of Social Security tax on 92.35 percent of their net company income.

Several groups are excused from paying Social Security tax, including some non-resident foreigners and members of religious organizations with particular ideologies.

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