Social Security - I. Paying into the system
Social Security taxes
Workers and their employers are taxed on wages and other compensation up to an annual limit to pay for Social Security benefits. Self-employed individuals pay both the worker's and the employer's shares of the Social Security tax.
- Employees - For workers employed by somebody else:
- Employee pays 6.2%
- Employer pays 6.2%
- Self-employed individual pays 12.4%
- Compensation limit - Social Security taxes are paid on compensation up to set annual limit. Above that limit, no Social Security taxes are paid. The limit is indexed for inflation.
- 2014 limit: $117,000
- Medicare taxes - In addition to Social Security taxes, workers also pay Medicare taxes on their compensation. There is no compensation limit for Medicare taxes.
- Employee pays 1.45%
- Employer pays 1.45%
- Self-employed pays total of 2.9%