The Old Age, Survivors and Disability Insurance (OASDI) tax, also referred as the Social Security Tax is a percentage of gross earnings which must be paid by employees, employers and self-employed citizens. The foremost purpose behind this is to fund the social security programs run by the Social Security Administration (SSA). The federal government has set a limit in order to determine how much income of an employee, employer or self-employed is subject to social security tax. However, the tax limit for an employee or a self-employed citizen may differ since a self-employed citizen pays both as an employee or an employer.
The SSA issues a monthly aid to the eligible citizens under Supplemental Social Income (SSI), Social Security Disability Insurance (SSDI) and Veterans’ Affairs (VA) benefits. As of February 2024, around 67 million citizens in the United States of America received social security benefits. The social security tax has an annual limit which keeps change on an annual basis based on the national average wage index. As of 2024, the social security tax limit for 2024 is $168,600 raised from $160,200 in 2023. Through this blog, you can gain insights on necessary attributes on social security tax along with its limit and the social security changes throughout the years.
What is Social Security Tax Limit?
- The SSA pays monthly social security to the retired seniors, disabled and survivor citizens. The social security taxes are funded by the Federal Insurance Contribution Act (FICA), established in 1935 which allows the employees to contribute a certain amount of their pay checks to fund social security in their employment years. In addition to it, an employer also pays an equal taxable income as of an employee to fund the social security program. Apart from it, the federal government also imposed the Self-Employment Contribution Act (SECA) for the self-employed citizens. It requires the self-employed citizens to pay both as an employee and employer. As per the social security administration, the OASDI tax rate for wages paid in 2024 is set by statute at 6.2 percent for employees and employers. In addition to, the OASDI tax rate for a self-employment income is 12.4% in 2024 which covers both the employee’s and employer’s parts.
- The social security is applicable on the income earned by an employee or a self-employed citizen. The U.S. government has set a limit on the OASDI taxes which must not be exceed by an employee or employer and a self-employed citizen. The SSA guarantees the retirement benefits to the eligible citizens who contributed to the social security during their retirement age. The pension amount will depend on your income and your age. For instance, the higher you earn, the higher your retirement income will be. As of 2024, the SSA issues a monthly check of $943 to an eligible individual and a check of $1,415 to a married couple. A disabled citizen is benefitted by a monthly aid of $1,537on qualifying the eligibility criteria.
Social Security Tax Limit 2024 Quick Details
| Post name | Social Security Tax Limit 2024 |
| Country | The USA |
| Department | SSA |
| Applicable year | 2024 |
| Beneficiaries | Retirees and disabled or survivor citizens |
| Official website | www.ssa.gov |
Social Security Tax Limit in US 2024
The social security tax changes each year with change in national average wage index. As of 2024, the social security tax limit for employees and employers is $168,600 raised from the $160,200 in 2023. It means, an individual having a wage equal to or over $168,600 would contribute an average of $10,453.20 to the OASDI program in 2024 with a statute at 6.2% for employees and employers only. It was $9,932.40 as of year 2023. Apart from it, as you all know, a self-employed citizen will contribute for both employee and employer with a statute at 12.4% in 2024. It is to notify the citizens that the income which you will earn beyond the wage cap amount will not be subject to 6.2% social security tax payroll.
In addition to it, the SSA also implements the cost of living adjustments (COLA) in the social security benefits each year. The COLA increase is measured as per the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). In 2024, the COLA increase is 3.2% which is applied to the social security monthly payments. The COLA increase is based on the rise in inflation and cost of living each year. SSA believes, if the cost of living is rising each year, so should the social security monthly payments for the beneficiaries.
Social Security Tax Limit Over the Years
As previously mentioned, the social security tax changes each year with change in national average wage index. You can take a look at the changes in social security tax throughout the years:
| Year | Social Security Tax Limit |
| 2005 | $90,000 |
| 2006 | $94,200 |
| 2007 | $97,500 |
| 2008 | $102,200 |
| 2009 | $106,800 |
| 2010 | $106,800 |
| 2011 | $106,800 |
| 2012 | $110,100 |
| 2013 | $113,700 |
| 2014 | $117,000 |
| 2015 | $118,500 |
| 2016 | $118,500 |
| 2017 | $127,200 |
| 2018 | $128,400 |
| 2019 | $132,900 |
| 2020 | $137,400 |
| 2021 | $142,800 |
| 2022 | $147,000 |
| 2023 | $160,200 |
| 2024 | $168,200 |
Social Security Tax Limit – Additional Information
To be eligible for the maximum social security payments, you must be aware of certain factors like your age and income. A person getting post-retirement benefits is applicable for the maximum social security income as compared to those who retire at 62. For instance, the maximum social security income provided in 2024 is $4,873. However, if you retire at full retirement age, then you are eligible for a monthly aid of $3,822 in 2024.
As discussed above, the social security tax limit is set at $168,600 by the federal government. However, not every individual has to pay social security taxes in the country. The individual must meet the following requirements in order to be exempted from the social security tax.
- For instance, a non-resident alien which is neither a citizen of the country nor a legal resident but residing in the country on a temporary basis; such as students.
- In addition to it, the non-resident aliens who are working in the United States of America for a foreign government.
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As a Editor at Sass News Portal ,Lara skillfully combines her knowledge of political economy and personal finance to empower readers with crucial insights and answers to their most pressing questions. With her finely honed analytical skills and a commitment to providing accurate coverage of today’s pressing issues, Lara strives to engage readers across a wide range of topics.