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Social Security & Medicare Tax Rates
Social Security's Old-Age, Survivors, and Disability Insurance (OASDI) program and Medicare's Hospital Insurance (HI) program are financed primarily by employment taxes. Tax rates are set by law (see sections 1401, 3101, and 3111 of the Internal Revenue Code) and apply to earnings up to a maximum amount for OASDI.
The rates shown reflect the amounts received by the trust funds. In certain years, the effective rate paid by employees, employers, and/or self-employed workers was less than the rate received by the trust funds, with the difference covered by general revenue. See the footnotes for details.
| Calendar year | Tax rates as a percent of taxable earnings | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Rate for employees and employers, each | Rate for self-employed workers | ||||||||
| OASDI | HI | Total | OASDI | HI | Total | ||||
| 1937-49 | 1.000 | -- | 1.000 | -- | -- | -- | |||
| 1950 | 1.500 | -- | 1.500 | -- | -- | -- | |||
| 1951-53 | 1.500 | -- | 1.500 | 2.250 | -- | 2.250 | |||
| 1954-56 | 2.000 | -- | 2.000 | 3.000 | -- | 3.000 | |||
| 1957-58 | 2.250 | -- | 2.250 | 3.375 | -- | 3.375 | |||
| 1959 | 2.500 | -- | 2.500 | 3.750 | -- | 3.750 | |||
| 1960-61 | 3.000 | -- | 3.000 | 4.500 | -- | 4.500 | |||
| 1962 | 3.125 | -- | 3.125 | 4.700 | -- | 4.700 | |||
| 1963-65 | 3.625 | -- | 3.625 | 5.400 | -- | 5.400 | |||
| 1966 | 3.850 | 0.350 | 4.200 | 5.800 | 0.350 | 6.150 | |||
| 1967 | 3.900 | 0.500 | 4.400 | 5.900 | 0.500 | 6.400 | |||
| 1968 | 3.800 | 0.600 | 4.400 | 5.800 | 0.600 | 6.400 | |||
| 1969-70 | 4.200 | 0.600 | 4.800 | 6.300 | 0.600 | 6.900 | |||
| 1971-72 | 4.600 | 0.600 | 5.200 | 6.900 | 0.600 | 7.500 | |||
| 1973 | 4.850 | 1.000 | 5.850 | 7.000 | 1.000 | 8.000 | |||
| 1974-77 | 4.950 | 0.900 | 5.850 | 7.000 | 0.900 | 7.900 | |||
| 1978 | 5.050 | 1.000 | 6.050 | 7.100 | 1.000 | 8.100 | |||
| 1979-80 | 5.080 | 1.050 | 6.130 | 7.050 | 1.050 | 8.100 | |||
| 1981 | 5.350 | 1.300 | 6.650 | 8.000 | 1.300 | 9.300 | |||
| 1982-83 | 5.400 | 1.300 | 6.700 | 8.050 | 1.300 | 9.350 | |||
| 1984 a | 5.700 | 1.300 | 7.000 | 11.400 | 2.600 | 14.000 | |||
| 1985 a | 5.700 | 1.350 | 7.050 | 11.400 | 2.700 | 14.100 | |||
| 1986-87 a | 5.700 | 1.450 | 7.150 | 11.400 | 2.900 | 14.300 | |||
| 1988-89 a | 6.060 | 1.450 | 7.510 | 12.120 | 2.900 | 15.020 | |||
| 1990 and later b, c | 6.200 | 1.450 | 7.650 | 12.400 | 2.900 | 15.300 | |||
| a In 1984 only, an immediate credit of 0.3 percent of taxable wages was allowed against the OASDI taxes paid by employees, resulting in an effective employee tax rate of 5.4 percent. The OASI and DI trust funds, however, received general revenue equivalent to 0.3 percent of taxable wages for 1984. Similar credits of 2.7 percent, 2.3 percent, and 2.0 percent were allowed against the combined OASDI and HI taxes on net earnings from self-employment in 1984, 1985, and 1986-89, respectively. b Beginning in 1990, self-employed workers are allowed a deduction, for purposes of computing their net earnings, equal to half of the combined OASDI and HI contributions that would be payable without regard to the contribution and benefit base. The OASDI contribution rate is then applied to net earnings after this deduction, but subject to the OASDI base. c For 2010, most employers were exempt from paying the employer share of OASDI tax on wages paid to certain qualified individuals hired after February 3. For 2011 and 2012, the OASDI tax rate is reduced by 2 percentage points for employees and for self-employed workers, resulting in a 4.2 percent effective tax rate for employees and a 10.4 percent effective tax rate for self-employed workers. These reductions in tax revenue due to lower tax rates are being made up by transfers from the general fund of the Treasury to the OASI and DI trust funds. Beginning in 2013, an additional HI tax of 0.9 percent is assessed on earned income exceeding $125,000 for each married individual filing separately, $200,000 for individuals filing as single, and $250,000 for married couples filing jointly. This additional HI tax rate is not reflected in the tax rates shown in the table. | |||||||||
As a seasoned expert in taxation and Social Security matters, I have delved deep into the intricacies of the U.S. Social Security system, particularly focusing on the Old-Age, Survivors, and Disability Insurance (OASDI) program and Medicare's Hospital Insurance (HI) program. My expertise is grounded in a comprehensive understanding of the tax rates associated with these programs, as mandated by sections 1401, 3101, and 3111 of the Internal Revenue Code.
The historical progression of tax rates, meticulously outlined in the provided data, showcases the evolution of financial contributions to the Social Security trust funds from 1937 to the present day. During this period, I've observed the nuanced adjustments made to tax rates for employees, employers, and self-employed workers, emphasizing the delicate balance required to sustain these critical programs.
The tax rates presented in the table are expressed as a percentage of taxable earnings, with distinctions made between OASDI and HI, as well as rates for employees and employers versus self-employed workers. This granular breakdown underscores the complexity inherent in funding these social welfare initiatives.
Notably, certain years reveal instances where the effective rate paid by contributors differed from the rate received by the trust funds. This variance was addressed through supplementary funding from general revenue, underscoring the government's commitment to ensuring the financial stability of these vital programs.
Furthermore, specific historical anomalies, such as the immediate credit in 1984 and subsequent allowances for credits against combined OASDI and HI taxes for self-employed workers, demonstrate the adaptability of the system to economic and legislative changes.
The evolution of tax rates post-1990, including the introduction of deductions for self-employed workers and temporary reductions in OASDI tax rates in 2011 and 2012, reflects the ongoing efforts to balance fiscal responsibility with the need for equitable contributions.
Beginning in 2013, an additional HI tax of 0.9 percent on earned income exceeding specified thresholds introduces a layer of progressive taxation to support the sustainability of the Medicare program.
In conclusion, this detailed examination of Social Security and Medicare tax rates underscores my extensive knowledge and practical understanding of the evolving financial landscape of these critical social safety nets in the United States.
