When you look at your W-2, you’ll see a FICA deduction. That stands for the Federal Insurance Contributions Act, and it refers to your Social Security and Medicare deduction. You’ll pay 6.2 percent of your gross wages to Social Security up to the Social Security income limit, and 1.45 percent to Medicare, for which there is no limit. If you are an employee, your employer will match your Social Security payment, so the government receives the equivalent of 12.4 percent of your gross wages. If you are self-employed, you must pay the entire 12.4 percent yourself.
You only stop paying Social Security tax if you reach that year's annual income limit.
At What Age Do You Stop Paying Social Security Tax?
There is no age limit for paying Social Security tax, and you will pay it as long as you are working, up to the income limit. Approximately 171 million workers are covered under Social Security, according to the Social Security Administration. You can’t opt out of Social Security, but high-income earners stop paying the tax once they reach the Social Security income limit.
Social Security Tax Exemption
While Social Security tax is generally mandatory, there are a few exemptions. Members of certain religious groups do not have to pay Social Security tax if their sect refuses to accept any type of Social Security benefits. Such a group is only eligible if they have been in existence since 1950 or earlier. The SSA requires that such religious groups allow their members to maintain a “reasonable” standard of living since at least 1950.
Those working for the federal government who were hired before 1984 do not pay Social Security tax, as they belong to the Civil Service Retirement System. Federal employees hired after 1984 do pay Social Security taxes. Some state and local government employees do not pay Social Security taxes if they have only a pension plan. If they are also covered by Social Security, then they must pay into the system.
Most nonresident aliens working in the U.S. must pay Social Security, but not if they are working for a foreign government, or are educational professionals or students.
Social Security Income Limit 2018
For 2018, the payroll tax cap on Social Security is $128,400. Once an individual earns more than that amount, Social Security tax is no longer withheld from their paycheck.
Social Security Income Limit 2017
For 2017, the payroll tax cap on Social Security was $127,200. In effect, that gives workers a 6.2 percent boost in their paychecks, or a 12.4 percent raise if they are self-employed.
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