The Social Security tax is a percentage of gross wages that most employees, employers and self-employed workers must pay to fund the federal program.
Social Security Tax is typically deducted by employers from employee paychecks and sent to the government. The money is used in "pay-as-you-go" system.
In the US, both employers and employees are required to pay Social Security taxes. If you work, paying it is essentially inescapable.
These taxes are placed into trust accounts that are only to be used to pay for widow and widower payments, disability benefits and Social Security retirement benefits.
There is a flat rate of 12.4% applied to the entire Social Security tax. The employee withholds half (6.2%) of this tax through paycheck withholding.
Social Security taxes have a wage base. Thus, Social Security tax is only applied to a portion of employee wages. In 2022, the Social Security tax limit is $147,000.
Multiply the employee’s gross taxable wage by the Social Security tax rate to calculate Social Security tax. Pay frequency is irrelevant.