About 94 percent of the U.S. workforce pays into Social Security, which works out to roughly 183 million workers contributing each year through payroll or self-employment taxes.1Social Security Administration. Fast Facts and Figures About Social Security The people who don’t pay fall into a small set of defined categories: certain state and local government workers covered by their own retirement systems, members of a few recognized religious sects, most students working for their own school, and some non-resident aliens on specific visa types. Everyone else — wage earners, freelancers, business owners, gig workers — is in the system whether they think about it or not.
How Employees Pay
If you receive a W-2, Social Security tax comes out of every paycheck under the Federal Insurance Contributions Act. Your share is 6.2 percent of wages, and your employer pays a matching 6.2 percent on the same wages for a combined 12.4 percent going to the program.2Office of the Law Revision Counsel. 26 USC 3101 – Rate of Tax The employer half doesn’t show up on your pay stub, but it’s sent to the Treasury alongside your withholding.3Internal Revenue Service. Topic No 751, Social Security and Medicare Withholding Rates
Not every dollar you earn is taxed. For 2026, only the first $184,500 of wages is subject to the 6.2 percent withholding. Earnings above that cap are free of the Social Security portion of FICA for the rest of the year. The cap moves each year with the national average wage index. A worker who hits the cap in 2026 will contribute $11,439, and the employer will match it.4Social Security Administration. Contribution and Benefit Base
One point of confusion worth clearing up: Medicare’s 1.45 percent Hospital Insurance tax is separate. It has no wage cap and it flows into a different trust fund, so it isn’t part of the Social Security count even though it comes out of the same paycheck.5Social Security Administration. FICA and SECA Tax Rates
How the Self-Employed Pay
Freelancers, contractors, and business owners have no employer to split the bill with. Under the Self-Employment Contributions Act, they owe the full 12.4 percent on their net self-employment income.6Office of the Law Revision Counsel. 26 USC 1401 – Rate of Tax The tax starts once net earnings from self-employment reach $400 in the tax year. Below that, no Social Security tax is due.7Office of the Law Revision Counsel. 26 USC 1402 – Definitions
To offset paying both sides, the IRS lets self-employed filers deduct half of the self-employment tax when calculating adjusted gross income. The deduction is claimed on Schedule 1 of Form 1040 and reduces income tax, not the self-employment tax itself. The same $184,500 cap applies, and it’s shared across wages and self-employment income, so someone with both types of earnings stops owing the Social Security portion once their combined total hits the cap.4Social Security Administration. Contribution and Benefit Base
Household Employers
If you pay a nanny, housekeeper, or other domestic worker at least $3,000 in cash wages during 2026, you become a household employer responsible for withholding and paying Social Security and Medicare taxes on those wages.8Internal Revenue Service. Topic No 756, Employment Taxes for Household Employees Below that amount, no FICA is required, and the wages don’t count toward the worker’s future Social Security benefits. The threshold adjusts periodically.
Who Is Exempt
The exemptions are narrow. Falling into one requires meeting a specific statutory test, not simply preferring to opt out.
State and Local Government Employees
Some public-sector workers participate in a state or local retirement system instead of Social Security. Section 218 of the Social Security Act allows voluntary agreements between states and the SSA to bring public employees into the system, but those agreements don’t cover every worker.9Social Security Administration. Section 218 Agreements Where no agreement exists for a particular retirement system, employees in positions covered by that system don’t pay Social Security taxes on that work and don’t earn Social Security credits for it.
Members of Certain Religious Groups
Members of recognized religious sects with longstanding objections to public and private insurance can apply for exemption from self-employment tax by filing IRS Form 4029. The sect must have existed continuously since December 31, 1950, and must have an established practice of caring for its dependent members.10Office of the Law Revision Counsel. 26 USC 1402 – Definitions The applicant must also waive all rights to Social Security and Medicare benefits. In practice, this exemption applies almost entirely to Amish and certain Mennonite communities.11Internal Revenue Service. Form 4029 – Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits
Students Working for Their School
Students employed by the school, college, or university where they’re enrolled at least half-time are generally exempt from FICA on that campus employment.12Office of the Law Revision Counsel. 26 USC 3121 – Definitions The work has to be incidental to the course of study. A full-time university employee who happens to take one class won’t qualify.13Internal Revenue Service. Student FICA Exception
Certain Non-Resident Aliens
Non-resident aliens on certain visa types, including F-1 and J-1, are generally exempt from Social Security taxes during the period of their authorized stay.14Internal Revenue Service. Foreign Student Liability for Social Security and Medicare Taxes
Paying In Isn’t the Same as Qualifying
Contributing to Social Security doesn’t by itself entitle you to a retirement check. You need 40 work credits over your lifetime to qualify for retirement benefits, with a maximum of four credits per year. In 2026, one credit is earned for every $1,890 in covered earnings, so $7,560 in a year is enough to max out the four credits.15Social Security Administration. Social Security Credits and Benefit Eligibility
Forty credits works out to roughly ten years of work at even modest income levels. Disability benefits use a different formula tied to your age when you become disabled, but the underlying rule is the same: no credits, no benefits. Workers who spent significant time in exempt employment, or who took long breaks from paid work, can end up short of the credits they assumed they had.
Checking Your Record
Every dollar you pay in gets logged against your earnings record, and that record sets your future benefit amount. If an employer underreported wages or a year of self-employment income didn’t post correctly, the eventual benefit can be smaller than what you actually earned. The SSA recommends reviewing your record at least once a year, ideally in August after the prior year’s earnings have been processed.16Social Security Administration. Review Record of Earnings
You can check your earnings history by signing into a my Social Security account at secure.ssa.gov.17Social Security Administration. Get Your Social Security Statement If you’d rather not use the online tool, request a paper statement by filing Form SSA-7004. Spot a discrepancy? Call the SSA at 1-800-772-1213 (TTY 1-800-325-0778), Monday through Friday, 8 a.m. to 7 p.m., and ask to verify the recorded earnings for the year in question.16Social Security Administration. Review Record of Earnings Catching errors early is much easier than reconstructing pay records from a job you left a decade ago.