Social Security Tax
Tax Glossary Term
Definition
Social Security tax is the larger of the two FICA components. Employees pay 6.2% of their wages, and employers match that with another 6.2%, for a combined 12.4%. This tax only applies up to the annual wage base limit, which is $184,500 for 2026. Once your cumulative wages for the year reach that ceiling, no more Social Security tax is withheld from subsequent paychecks — though Medicare tax continues with no cap. The wage base is adjusted each year based on the national average wage index. If you work multiple jobs, each employer withholds Social Security tax independently, which means you could overpay if your combined wages exceed the wage base. In that case, you claim the excess as a credit on your tax return. Self-employed individuals pay both halves (12.4%) on 92.35% of their net self-employment earnings, up to the same wage base. The revenue funds the Old-Age, Survivors, and Disability Insurance (OASDI) program, which pays retirement, disability, and survivor benefits. Your benefit amount at retirement is based on your 35 highest-earning years of Social Security-taxed wages, indexed for inflation. Understanding the wage base is important for high earners. Once you pass it, your marginal payroll tax rate drops from 7.6% to just 1.5% (Medicare only).
Example
Annual wages: $200,000
SS tax on first $184,500: $184,500 x 6.2% = $11,439
SS tax on remaining $15,500: $0 (above wage base)
Total SS tax: $11,439