This is the worlds leading source of financial content on the web, ranging from market news to retirement strategies, investing education to insights from advisors.
Forex Forever!

When Do I Stop Paying Social Security Tax?

Author: Michael Taylor

"In this world, nothing can be said to be certain, except death and taxes," as Ben Franklin wrote – and among the taxes imposed on your paycheck, nothing is as inflexible as those that go towards the Federal Insurance Contributions Act (FICA), colloquially known as Social Security. Whether salaried or self-employed, paid hourly wage or annualized sum, you must contribute, throughout your working life. No exceptions exist. Or do they?

Here's a quick refresher on the Social Security basics: If you work for an employer, your gross wages are currently taxed at 6.2%. Your employer matches that amount and sends a total of 12.4% to the government. If you work for yourself, then you pay the entire 12.4% of your earnings into Social Security because you are, in effect, both employee and employer; this is officially known as the Self-Employment Tax. (For more on the latter, see Starting A Small Business: Taxes.)

Who Doesn't Pay Social Security?

First of all: those making the big bucks. After an individual's income hits a certain level, his or her mandatory Social Security contributions cease on any amount earned after that. Officially known as the "wage base limit," the threshold changes every year. For 2015, the maximum amount of earnings subject to tax is $118,500. You pay no taxes on any income earned beyond that amount.

Next up: Certain religious groups. Members can be exempt from paying Social Security taxes if their sect, order or organization also officially declines to accept Social Security benefits for retirement or disability, or after death (to survivors). Members of these groups must apply for the exemption by completing IRS Form 4029. Some restrictions apply:

  • The group must have been in existence since 1950.
  • The group must have provided its members with a realistic standard of living since that time.
Come from Abroad or Go to School

Although nonresident aliens employed in the U.S. normally pay Social Security tax on any income they earn here, there are some exclusions. Mostly, these apply to students or educational professionals living and working in the country on a temporary basis, and possessing the correct type of visa. Their families and domestic workers can also be exempt.

American college and university students who work part time at their alma mater may also qualify for a Social Security tax exemption. The job must be contingent on the student's full-time enrollment at the college or university.

Enter Government Service (Sometimes)

Civilian employees of the federal government who started their jobs prior to 1984 are covered under the Civil Service Retirement System (CSRS), while federal government employees who were hired in 1984 or after belong to the Federal Employees' Retirement System (FERS). Employees covered by CSRS are not required to pay Social Security taxes, nor do they receive Social Security benefits. However, those covered by FERS are part of the Social Security system and do contribute to it at the current tax rate.

State or local government employees, including those working for a public school system, college or university, may or may not pay Social Security taxes. When they're covered by a pension plan and Social Security, then they must make Social Security contributions. But if they're protected solely by a pension plan, then they don't have to contribute into the Social Security system.

All 50 U.S. states, Puerto Rico and the Virgin Islands have Section 218 Agreements with the Social Security Administration, which lets the states provide Social Security coverage to public employees if they so desire. Click here to contact the administrator for your state.

Employees of foreign governments who are working here in the U.S. are most often not required to pay Social Security taxes. That might apply even if you're an American citizen working at an embassy or consulate. This exemption doesn't apply to your spouse or servants, though.

What About Senior Citizens?

If you're old enough to collect Social Security benefits but still working, you might think you can wave goodbye to paying into the Social Security fund. Sorry, but that's not true. Those deductions still keep coming out of your paycheck, no matter what your age, either until you exceed that $118,500 wage base limit or until you quit. For more info, see Must I pay Social Security taxes on my earnings after full retirement age?.

Unearned income, as from bond interest or stock dividends, doesn't count, though; neither does income drawn from a retirement savings account.

The Bottom Line

So, when do you stop paying Social Security tax? As long as you're employed, the answer is almost always "never." But there are exceptions to every rule, and if one of those discussed above seems to apply to you – don't hesitate to check it out.

last five articles

#526 Indeed vs. LinkedIn

Author: Matthew Taylor

More and more are taking to the internet to find the right job. There are a large number of employment websites to choose from, and not all of them operate the same way, which can make finding a job online both time consuming and difficult.Two of the most popular res for job seekers are ... see more

#1018 How Fico Credit Works & How It Makes Money

Author: Jacob Smith

If you've ever applied for a credit card or personal loan, the bank most likely used a computerized credit score to determine your likelihood of paying it back. And there's a very good chance that the lender used one number in particular: the FICO score.Few companies have as much effect on... see more

#1209 Medigap Vs. Medicare Advantage: Which Is Better?

Author: Ethan Williams

Like any massive insurance enterprise, Medicare is confusing. will give you hundreds of pages of explanation, but luckily, the basics of the program aren't difficult to grasp. As the cliché goes, however, the devil is in the details.Medicare has four basic parts – A, B, C a... see more

#1458 Buying A Second Home To Rent: Dos and Don'ts

Author: Jacob Taylor

In this time of historically low interest rates, it makes sense to consider investing in rental property. If the biggest chunk of the monthly cost of ownership – the mortgage payment – can be frozen for 30 years while rents gradually increase, the resale value of the property escalates and al... see more

#1079 Websites That Offer a 'True' Free Credit Score

Author: Christopher Jackson

You can get your credit reports for free, but what about your credit score? Unfortunately, there is no law that forces FICO or any other credit-scoring company to give your credit score to you once per year.The only way you can get the score is an unhappy one: If you're turned down for a l... see more