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%
II. Eligibility and benefit: Retirement
RetirementAs both employee and employer, you have to pay more in Social Security, but there are deductions that can help lighten the tax burden.
RetirementThe Social Security cap increase will be 7% in 2017, but even that may not be enough to keep Social Security from running out of funds.
RetirementAlmost never, unless you belong to one of these special groups.
RetirementThe Federal Insurance Contributions Act is a U.S. law that requires a paycheck deduction be paid to Social Security and Medicare.
RetirementUnderstand more about the purpose of the Social Security system and learn which groups of taxpayers are automatically exempt from the tax.
RetirementLearn about the benefits that a business must offer to employees, such as family and medical leave, as well as various forms of insurance coverage.
TaxesNot paying federal income taxes might sound appealing, but is it really a good idea?
Financial AdvisorIt may surprise many that Social Security benefits are taxed. The best way to not let it derail your tax situation is to plan for it. Here's how.
RetirementFind out how Social Security really works, why the system is in trouble and whether retirees are simply living too long for Social Security to remain viable.
RetirementYou've probably contributed to this fund, but will you reap the benefits? Find out here.