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Social Security Tax Formula:
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Social Security tax is a payroll tax collected to fund the Social Security program, which provides retirement, disability, and survivor benefits. In 2024, the tax rate is 6.2% for employees (matched by employers) on earnings up to the wage base limit.
The calculator uses the following formula:
Where:
Explanation: The tax is calculated on the lesser of the employee's taxable income or the wage base limit. Earnings above the wage base are not subject to Social Security tax.
Details: Social Security tax funds the Social Security program, which provides benefits to retired workers, disabled individuals, and survivors of deceased workers. Accurate calculation ensures proper funding of these vital programs.
Tips: Enter your taxable income in dollars and the wage base limit (default is $168,600 for 2024). The calculator will determine your Social Security tax obligation for the year.
Q1: What is the 2024 Social Security wage base?
A: The wage base for 2024 is $168,600. Earnings above this amount are not subject to Social Security tax.
Q2: Is the Social Security tax rate the same for everyone?
A: Yes, the 6.2% rate applies to all employees (with employers matching this amount). Self-employed individuals pay both portions (12.4% total).
Q3: Are there any income types exempt from Social Security tax?
A: Certain types of income like investment income, rental income, and some retirement benefits are not subject to Social Security tax.
Q4: What happens if I have multiple jobs?
A: Each employer will withhold Social Security tax up to the wage base. You can claim a refund for any overpayment when you file your tax return.
Q5: How often does the wage base change?
A: The wage base typically increases annually based on national average wage increases, as determined by the Social Security Administration.