Whether state employees pay into Social Security depends on the job: about three out of four state and local government workers do pay the 6.2% Social Security tax on their wages, but roughly 6.5 million public employees are excluded because they participate in a qualifying government pension instead. If your employer has brought your position under Social Security, the deduction shows up on every paycheck just as it would in the private sector. If your employer has kept the position out, you contribute to a state or local retirement system and owe no Social Security tax on those wages, though Medicare tax almost always still applies.
What Determines Whether You Pay
Three rules decide the question for any given state or local government job.
The first is whether your state has voluntarily brought your position into Social Security through what is called a Section 218 agreement. Section 218 of the Social Security Act lets each state negotiate with the Social Security Administration to extend coverage to specific groups of its public employees.1Social Security Administration. Social Security Act 218 – Voluntary Agreements for Coverage of State and Local Employees Once a group is covered, the coverage is permanent for those positions. Every state has some kind of Section 218 agreement, but the groups pulled in vary widely.
The second is whether you belong to a qualifying public retirement system. If you do, federal law lets your employer keep you out of Social Security. If you don’t, the Omnibus Budget Reconciliation Act of 1990 requires that you be covered. That law closed a gap where some public workers had built no retirement protection at all: no pension, no Social Security, nothing. Since 1990, every state and local government employee who is not in a qualifying public pension plan must pay into Social Security.2Social Security Administration. Omnibus Budget Reconciliation Act of 1990 Vol 1
The third is the rate. When Social Security tax applies, you pay 6.2% of your wages and your employer pays another 6.2%, on earnings up to $184,500 for 2026.3Social Security Administration. Contribution and Benefit Base
So the shortcut is this: covered by a Section 218 agreement, you pay. Enrolled in a qualifying government pension, you don’t. Neither of those, you pay.
What Counts as a Qualifying Pension
Not every retirement plan run by a state or local government keeps its employees out of Social Security. The IRS tests each plan against federal minimum standards, and the standards depend on whether the plan is defined benefit or defined contribution.
A defined benefit plan must provide a single life annuity starting no later than age 65 equal to at least 1.5% of average compensation for each year of credited service.4Social Security Administration. Revenue Procedure 91-40 – Section: Defined Retirement System Safe Harbor Formulas A defined contribution plan must allocate at least 7.5% of your compensation to your account each year, and employer matching contributions count toward that floor.5eCFR. 26 CFR 31.3121(b)(7)-2 – Service by Employees Who Are Not Members of a Public Retirement System
If the plan falls below these thresholds, employees are treated as having no qualifying pension and Social Security coverage becomes mandatory. Both employer and employee then owe the full 6.2%, potentially retroactive to when the shortfall began.
Narrow Exemptions Beyond the Pension Rule
A few categories of public workers are exempt from Social Security under the Internal Revenue Code even if no qualifying pension is involved.6Office of the Law Revision Counsel. 26 USC 3121 – Definitions Each is narrow.
Students who work for the public college or university they attend are generally exempt, provided the relationship with the school is primarily educational rather than employment. Half-time students who aren’t career staff can qualify.7Internal Revenue Service. Student FICA Exception
Election workers earning less than $2,500 in a calendar year owe no Social Security or Medicare tax on those wages for 2026. The threshold adjusts annually for inflation.8Federal Register. Cost-of-Living Increase and Other Determinations for 2026
Emergency workers hired temporarily to respond to fires, floods, earthquakes, storms, or similar events are exempt for the duration of the emergency. Ongoing employment doesn’t qualify.
Medicare Tax Almost Always Still Applies
Being outside Social Security doesn’t mean being outside all federal payroll tax. State and local government employees hired after March 31, 1986 owe Medicare (hospital insurance) tax regardless of whether they’re in Social Security or a government pension.6Office of the Law Revision Counsel. 26 USC 3121 – Definitions The only workers outside the Medicare mandate are those who have worked continuously for the same employer since before April 1, 1986, and those whose Medicare is already handled through a Section 218 agreement.
The rate is 1.45% for you and 1.45% for your employer, with an additional 0.9% on individual earnings above $200,000. If your paystub shows a Medicare deduction but no Social Security deduction, that’s normal for a non-covered position. It doesn’t mean you’re building Social Security credits.
The 2025 Repeal of WEP and GPO
For decades, two provisions cut Social Security benefits for workers who also received a pension from non-covered government work. The Windfall Elimination Provision reduced your own retirement benefit. The Government Pension Offset reduced spousal or survivor benefits by two-thirds of your government pension amount. Together they could slash or wipe out benefits that non-covered workers had earned through other jobs or through a spouse.
Both are repealed. The Social Security Fairness Act, signed on January 5, 2025, ended the WEP and GPO retroactively to January 2024.9Social Security Administration. Social Security Fairness Act – Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) Update SSA began paying the higher monthly amounts in spring 2025 and issued a one-time retroactive payment covering the period back to January 2024. A government pension from non-covered work no longer reduces Social Security benefits you earned elsewhere or through a spouse.
How to Check Your Own Status
Three sources will tell you where your job stands.
Your Paystub
Look for a line labeled “SS,” “OASDI,” or “FICA-SS.” A deduction of 6.2% of gross pay (up to the $184,500 cap for 2026) means you’re paying in. If the only FICA line is Medicare at 1.45%, your position is outside Social Security.
Your W-2
On your year-end Form W-2, Box 3 shows Social Security wages and Box 4 shows Social Security tax withheld. For 2026, Box 4 shouldn’t exceed $11,439. If both boxes are zero or blank, that job didn’t pay into Social Security that year.10Internal Revenue Service. General Instructions for Forms W-2 and W-3 (2026)
Your Social Security Statement
A free account at ssa.gov gives you access to your Social Security Statement, which lists reported earnings year by year and estimates your future benefits.11Social Security Administration. my Social Security Years of government work that show zero earnings on the statement were non-covered positions. Reporting errors happen, especially for people who move between covered and non-covered jobs, so it’s worth checking the statement periodically rather than waiting for retirement to catch a mistake.