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|
|1990 and later b, c||6.200||1.450||7.650||12.400||2.900||15.300|
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.