Home >> Payroll Accounting Topics
Social Security Tax Rate
Social Security Tax Overview
The social security tax rate began when the Social Security Act of 1935 established Old Age and Survivor’s Insurance, which was funded by compulsory savings by wage earners. The savings were to be paid back to the wage earners upon their retirement at age 65. The initial payments were 1% of gross wages by both the employee and employer, gradually ramping up to 3% by 1948. Employers were held responsible for withholding this tax from employee pay. The Act also created the Federal Unemployment Trust Fund through additional withholding, which could be reduced by up to 90% if an employee also contributed to a state unemployment fund. Originally, only employees engaged in commercial or industrial occupations were covered by this Act, though numerous later changes to the Act have greatly expanded its coverage. The Social Security tax rate is now governed by the Federal Insurance Contributions Act (FICA), which is why the term "FICA" is associated with Social Security taxes.
Social Security Tax Rates
Use the following table to determine the Social Security tax rate, as well as the maximum amount of your taxable earnings to which the tax is applicable. For example, if you earned $200,000 in 2010, then the amount of employer Social Security tax paid would be $6,621.60 (calculated as 6.2% x $106,800 wage cap).
| Tax Year | FICA Tax Rate | Wage Cap |
| 2011 | 4.2% Employee / 6.2% Employer | $106,800 |
| 2010 | 6.2% | 106,800 |
| 2009 | 6.2% | 106,800 |
| 2008 | 6.2% | 102,000 |
| 2007 | 6.2% | 97,500 |
| 2006 | 6.2% | 94,200 |
| 2005 | 6.2% | 90,000 |
| 2004 | 6.2% | 87,900 |
| 2003 | 6.2% | 87,000 |
| 2002 | 6.2% | 84,900 |
| 2001 | 6.2% | 80,400 |
Note that Social Security is matched by the employee, so the total tax remitted to the government by the employer is 12.4% (with the exception of 2011, as noted in the preceding table). If you are self-employed, then you must pay the entire 12.4% yourself.
Similar Terms
The social security tax is also known as the FICA tax.
Related Topics
Are payroll withholding taxes an expense or liability?
Medicare tax rate
The work week
What is the employer FICA match?
What is the FUTA tax?