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Categories: General Tax Terms

Social Security Tax refers to a federal payroll tax imposed on earnings to fund the Social Security program, which provides benefits for retirees, disabled individuals, and survivors of deceased workers.

The tax is collected under the Federal Insurance Contributions Act (FICA) and is typically split between employees and employers, with each contributing a specified percentage of the employee’s gross wages. For 2023, the employee portion is 6.2% on earnings up to a certain annual limit, known as the wage base limit.

For example, if an employee earns $50,000 in a year, the Social Security Tax withheld from their paycheck would be $3,100 (6.2% of $50,000). Employers also contribute an equal amount, making the total contribution to the Social Security system from this employee $6,200.

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