A short list of workers is exempt from paying Social Security tax: members of qualifying religious sects, ordained ministers who object on conscience grounds, students working for their own school, certain state and local government employees, foreign government and international organization staff, nonresident-alien students on F, J, or M visas, railroad workers (covered by a parallel system), children working in a parent’s business, and household workers paid under the annual threshold. Every one of these exemptions carries the same price. No tax paid means no credits earned, and no credits means no Social Security retirement, disability, or survivor benefit built on that work.
Members of Qualifying Religious Sects
Under 26 U.S.C. 1402(g), a member of a recognized religious sect that opposes accepting public or private insurance benefits can apply for a full exemption from Social Security and Medicare taxes.1Office of the Law Revision Counsel. 26 USC 1402 – Definitions Personal objection isn’t enough. The IRS and the Commissioner of Social Security must find that the sect itself teaches against accepting insurance payments for death, disability, old age, retirement, or medical care.
The sect must also have existed continuously since December 31, 1950, and must have a longstanding practice of providing for its dependent members at a reasonable standard of living. That second requirement matters. The government won’t grant the exemption to a community that opts out of the safety net but doesn’t step in to replace it. The Amish and certain Mennonite groups are the best-known examples.
To claim it, you file IRS Form 4029 and waive all rights to benefits under Social Security and Medicare, both on your own earnings and on anyone else’s record.2Internal Revenue Service. About Form 4029, Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits The application is due by the filing deadline of your tax return for the first year you have self-employment income or are a member of an approved organization.3Social Security Administration. Social Security Handbook 1129 – Claiming the Tax Exemption If the exemption later stops applying, any future benefits reflect only the years you were actually covered.
Ministers and Members of Religious Orders
A separate exemption exists for ordained, commissioned, or licensed ministers, members of religious orders who have not taken a vow of poverty, and Christian Science practitioners. They can file Form 4361 to opt out of self-employment tax on ministerial earnings.4Internal Revenue Service. About Form 4361, Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners
Unlike the Form 4029 exemption, this one rests on the individual’s own religious or conscientious opposition. The religious body itself doesn’t have to oppose insurance. Before filing, the minister must inform their ordaining or licensing organization of that opposition. The deadline is the due date (including extensions) of the tax return for the second year in which the minister earned at least $400 from ministerial services. Miss it, and the exemption is gone for good.
Students Working for Their Own School
Students employed by the school, college, or university where they are enrolled and regularly attending classes pay no Social Security or Medicare tax on that income.5Office of the Law Revision Counsel. 26 USC 3121 – Definitions The IRS looks at whether the person is primarily a student who works, not a worker who studies. A student staffing the campus library or working in an on-campus research lab is the textbook case.6eCFR. 26 CFR 31.3121(b)(10)-2 – Services Performed by Certain Students in the Employ of a School, College, or University
Two limits catch people out. First, working for a different employer off campus never qualifies, even if the job relates to your major. The statute only covers employment by the school itself. Second, during school breaks longer than five weeks (most summer breaks), the exemption doesn’t apply. For shorter breaks such as winter or spring recess, the exemption continues if you were a qualifying student on the last day of the preceding term and are eligible to enroll for the next one. Full-time employees who happen to take a class or two also don’t qualify.
State and Local Government Workers Not Covered by a Section 218 Agreement
Social Security participation is not automatic for state and local governments the way it is in the private sector. Section 218 of the Social Security Act lets a state enter a voluntary agreement with the Social Security Administration to cover specific positions.7Social Security Administration. Section 218 Agreements Because these agreements cover positions rather than individuals, one department in a city government can participate while another does not.
Employees in positions outside any Section 218 agreement pay no Social Security tax and earn no Social Security credits for that work.8Social Security Administration. Introduction to State and Local Coverage They typically participate in a state or local pension system instead. About 28% of state and local public employees are in this situation. Teachers, police officers, and firefighters are the most commonly affected groups, depending on the state.
Foreign Government Employees and International Organization Staff
People working in the United States for a foreign government or an international organization pay no Social Security or Medicare tax on that compensation. This covers ambassadors, consular officers, and other diplomatic and non-diplomatic employees regardless of citizenship or where the work is performed.9Internal Revenue Service. Employees of a Foreign Government or International Organization – FICA Including Social Security and Medicare Tax Employees of international organizations receive the same treatment.
Foreign Students on F, J, or M Visas
Foreign students in the U.S. on F-1, J-1, or M-1 visas are exempt from Social Security and Medicare taxes while they remain nonresident aliens, which generally means during their first five calendar years in the country.10Internal Revenue Service. Foreign Student Liability for Social Security and Medicare Taxes The work must be permitted by USCIS and tied to the purpose of the visa. Once the student becomes a resident alien or shifts to a non-exempt status, ordinary withholding kicks in.
Railroad Workers
Railroad employees don’t pay Social Security tax, but this isn’t a real exemption. They’re covered by a parallel system under the Railroad Retirement Tax Act, and the Tier 1 rate mirrors Social Security exactly: 6.2% from the employee and 6.2% from the employer on the same wage base. Federal law specifically excludes railroad employees and employee representatives from the standard Social Security definition of employment.5Office of the Law Revision Counsel. 26 USC 3121 – Definitions The Railroad Retirement Board pays benefits designed to replace Social Security, not add to it. A Tier 2 tax funds additional benefits with no Social Security equivalent. Someone who works both railroad and non-railroad jobs in the same year can end up paying into both systems; the combined amount is capped, and any excess can be claimed as a credit on the tax return.11Internal Revenue Service. Excess Social Security and RRTA Tax Withheld
Children Working in a Parent’s Business
A child under 18 who works for a parent’s sole proprietorship, or for a partnership where both partners are the child’s parents, pays no Social Security or Medicare tax on those wages, and the parent owes no employer share.12Internal Revenue Service. Family Employees For domestic work performed in the parent’s home, the exemption runs until the child turns 21. Once the business is a corporation, or a partnership with any non-parent partner, the exemption disappears and ordinary payroll tax rules apply at any age.
Household Workers Paid Below the Annual Threshold
If you pay a nanny, housekeeper, or other household worker less than $3,000 in cash wages during 2026, neither you nor the worker owes Social Security or Medicare tax on that pay.13Social Security Administration. Employment Coverage Thresholds Once wages reach $3,000, you must withhold 6.2% for Social Security and 1.45% for Medicare from the worker’s pay and match those amounts as the employer.14Internal Revenue Service. Employment Taxes for Household Employees The threshold adjusts each year with the national average wage index, so verify the figure if you’re close to the line.
What Opting Out Actually Costs
Every exemption on this list carries the same trade-off. No tax means no credits, and Social Security retirement benefits, disability insurance, and survivor payments all depend on having enough work credits earned through taxed employment. Someone who spends an entire career in non-covered work won’t qualify for Social Security retirement benefits at all, even if a spouse does. The system is built as an earned benefit, and the IRS enforces the connection strictly.
One more distinction matters. A legal exemption is not the same as skipping payment. Self-employed workers who simply fail to pay owe interest on the unpaid self-employment tax, and the IRS can file federal tax liens on property. The people covered above are legally outside the system. Everyone else is inside it, whether they file the return or not.