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Summary: Social Security wages are a specific portion of an employee’s earnings subject to Social Security tax. This guide breaks down what’s included, what’s excluded, and how to calculate the tax rate correctly to ensure payroll compliance.
Social Security Wages refer to the total income earned by an individual, which is subject to the Social Security tax under the Federal Insurance Contributions Act (FICA).
Employers and employees contribute the same amount of Social Security tax, which is then used to fund social security programs, including retirement and disability benefit programs for eligible individuals.
The following types of earnings are included in Social Security Wages
- Salary
- Hourly wages
- Overtime Wages
- Bonuses
- Commissions
- Vacation Pay
- Sick Leave
- Certain taxable benefits, such as employer-provided vehicle
The following types of earnings are excluded from Social Security Wages:
- Tips
- Investment Income
- Travel reimbursements
- Health premiums paid by the employer
- Non-taxable fringe benefits
While most of the workers living in the U.S are subject to Social Security taxes, there are a few exemptions as listed below:
- Some religious groups that oppose public insurance programs (e.g., the Amish or Mennonites) can apply for a religious exemption by filing IRS Form 4029. These individuals are required to waive their right to benefits funded with social security taxes.
- Government Employees: Federal employees who were hired before 1984 and are covered under the Civil Service Retirement System (CSRS) instead of Social Security.
- Certain nonimmigrants and non-resident Aliens with specific types of visas. Detailed information for each type can be found on IRS’ official website.Â
- Students who are working in the same school in which they’re completing their course of study.Â
Employers and employees both contribute to the Social Security Tax at the following rates:
Employee: 6.2% of social security wages
Employer: 6.2% of an employee’s social security wages
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Total: 12.4% of an employee’s Social Security wages
The Social Security Administration determines the wage base limit each year. The wage limit for 2024 was $168,600, and for the current year, 2025, it is $176,100. Individuals earning more than the wage base limit will not pay Social Security tax on their earnings that exceed the limit.Â
For example, if an employee earns $195,000 in 2025, his total wages subject to Social Security tax will be $176,100 since that is the wage base limit for that year. Both employer and employee will contribute 6.2%, which is $10,918.20. So, the total Social Security tax paid will be $10,918.20*2 = $21,836.40.Â
Here’s a simple breakdown of the above:
Wages Subject to Social Security Tax
$176,100 (2025 limit)
Employee Tax Contribution
Employer Tax Contribution
6.2% of $176,100 = $10,918.20
6.2% of $176,100 = $10,918.20
Total Social Security Tax
$21,836.40
Since the employee earns more than the wage base limit of $176,100, the excess $18,000 ($195,000 – $176,100) is not taxed for Social Security. However, Medicare tax still applies to all earnings (with an additional 0.9% tax for high earners).
Andrew (Drew) joined the Remote People team in 2020 and is currently Director, Regulatory Affairs. For the past 13 years, he has been a trusted advisor to C-Suite executives and government ministers on international compliance and regulatory issues. Drew holds a law degree from the University of Otago, a PhD from the University of Sydney, and is an enrolled Barrister and Solicitor of the High Court of New Zealand.