How Does Social Security Tax Appear on My Paycheck?

All employers are required to withhold Social Security tax from employees’ paychecks, unless an exemption applies. If you receive a paycheck stub each payday, your employer might include your Social Security tax deduction on the pay stub. The appearance of the withholding on your check stub depends on varying factors.

On Aug. 14, 1935, President Franklin D. Roosevelt signed the Social Security Act. The act was originally called the Economic Security Act; when Congress reviewed the bill they changed the title. The first Social Security taxes were collected in January 1937. Political figures are not exempt from Social Security tax. The President, all Congressional members, the majority of political appointees and federal judges have been paying Social Security tax since 1984. Social Security provides benefits to retirees and their dependents, and the disabled and their dependents.

If your state requires your employer to give employees a paycheck stub, it may also list the information that should be included on the stub. In many cases, the employer must list each of the employee’s deductions for the payroll period. Social Security tax is collected under the authorization of the Federal Insurance Contributions Act. The official name for Social Security is the Old-Age, Survivors, and Disability Insurance. Consequently, Social Security tax can show on your paycheck stub as FICA or OASDI. Abbreviations vary by employers; some simply show the withholding as SS. The current deduction amount is shown beside the abbreviation.

Many employers include the employee’s year-to-date deductions on the paycheck stub. In this case, your Social Security tax withholding thus far for the year will show as a separate line item under the year-to-date column. Your final year-to-date data should mirror your W-2.

Your employer withholds Social Security tax from your paychecks at 4.2 percent for tax year 2011 of your gross income, up to the yearly wage limit of $106,800. Once you have met the annual wage base, it stops the withholding and resumes it at the start of the next year. If you have pretax voluntary deductions, such as a traditional 401k plan or a Section 125 medical plan, your employer deducts the benefit from your gross wages before withholding Social Security tax.

Only in rare cases does an exemption to Social Security tax exist, such as employees who work for a university or college at which they are also a student. Your employer pays 6.2 percent of gross wages for Social Security taxes, up to $106,800 for the year. Self-employed individuals pay 10.4 percent since they do not have an employer to pick up the remaining amount. Medicare – which provides hospital insurance to qualified individuals upon reaching age 65 – makes up the other half of FICA. Unlike Social Security tax, Medicare does not have an annual wage limit.