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How is Social Security financed?

Social Security is financed through a dedicated payroll tax. Employers and employees each pay 6.2 percent of wages up to the taxable maximum of $168,600 (in 2024), while the self-employed pay 12.4 percent.

Total income, including interest, to the combined OASI and DI Trust Funds amounted to $1.351 trillion in 2023. ($1.233 trillion from net payroll tax contributions, $51 billion from taxation of benefits, and $67 billion in interest)

The payroll tax rates are set by law, and for OASI and DI, apply to earnings up to a certain amount. This amount, called the contribution and benefit base, or taxable maximum, rises as average wages increase.

Tax rates for employees and employers each under current law
2024 5.3 0.9 6.2
SOURCE: 2024 OASDI Trustees Report