Social Security tax is a type of payroll tax paid by employers and employees — including self-employed individuals — to fund the U.S. Social Security program. Social Security tax is one of two types of taxes required under the Federal Insurance Contributions Act (FICA).

Most employers automatically withhold Social Security taxes from employees' wages and send it to the government. On your  pay stub  , Social Security taxes should appear among the other taxes withheld.

This money goes into a general Social Security fund to pay Social Security benefits for current retired employees. This means that employees do not have their own individual Social Security fund, but are paying into a general fund to use as needed.

It is the employer’s responsibility to withhold and pass on the correct amount, otherwise he or she could face a penalty.

The Social Security tax is mandated under the Federal Insurance Contributions Act (FICA). Its goal is to support existing employees in disability and older and retired employees in retirement cases. The Social Security tax funds the Social Security program, which   pays retirement, disability, and survivor benefits to more than 65 million Americans each month .

The Social Security tax applies to all employees, employers, and self-employed individuals. However, there are certain taxesDiscounts  , including:

• People who belong to religious groups that oppose receiving Social Security benefits
• Non-residents who are in the US temporarily as students
• Students who work at the school where they study, if their job is dependent on continued enrollment

It is possible to opt out of the Social Security tax, but it is very difficult. The most common reason for not paying the tax is a religious exemption for employees who belong to religious groups that oppose Social Security. That process requires several forms and is limited to religious groups founded before 1950 that provide their members with a decent standard of living. Nonresidents can also potentially opt out after a lengthy paperwork process. Employees who do not contribute to Social Security while working may not receive benefits when they retire.

The eligibility age for full Social Security benefits   is 65. However, it is possible to apply as early as age 62 and receive a reduced monthly benefit until the official retirement age. Employees can also choose to defer Social Security benefits until age 70 in exchange for an increased monthly benefit.

Workers who can no longer work due to injury or disability can also apply for Social Security benefits.

Although both society security taxes and 401(k) contributions typically come from wages, they are completely different.

A 401(k)  is an individual retirement plan  to which employees make tax-free contributions. Many employers match employee contributions. Any money contributed to a 401(k) goes into the employee's individual retirement account, while the Society Security Tax is added to a general fund, where eligibility standards and payment amounts depend on federal regulations, not the amount contributed.

No, these two types of taxes are different.

Social Security tax is deducted before income taxes are applied, so employees don't pay double tax on the same money. For example, an employee who earns $50,000 a year will have $3,100 deducted for Social Security. They will then only have to pay income tax on the remaining income, which is $46,900.

In states where income tax is not levied, employees also have to pay social security tax.

In 2022,  the Social Security tax was 12.4%  , with both employers and employees paying half each (6.2 percent). Self-employed individuals pay both sides of the tax. This tax rate applies to all types of earned income, including salaries, wages, and bonuses, up to a certain amount that changes annually.

In 2022, only the first $147,000 of annual income will be subject to Social Security tax. In 2023, that amount will increase to $160,200.

Employees can get part of their Social Security tax back if they or their employer overpaid.  To claim this refund  , you'll first need to talk to your employer and then file a form with the IRS. Getting a refund for overpaid Social Security tax is rare, but typically happens when an employee works multiple jobs in a year and reaches the Social Security tax limit with their combined earnings.