What percentage of an employee's gross wages is deducted for Social Security taxes?

The percentage of an employee's gross wages that is deducted for Social Security taxes is 6.2%. This rate is established by the federal government under the Federal Insurance Contributions Act (FICA), which mandates the collection of Social Security taxes to fund the program that provides benefits to retirees, disabled individuals, and survivors of deceased workers.

The 6.2% rate applies to earnings up to a certain income threshold, which is adjusted annually. Understanding this rate is essential, as it directly impacts the withholding from employees' paychecks. Additionally, employers match this percentage, contributing an additional 6.2% for each employee. This dual contribution model helps ensure robust funding for the Social Security program, making it vital for workers to be aware of these deductions and their implications for future benefits.

Being informed about the accurate percentage of Social Security tax is crucial for both employees and employers, as it plays a significant role in financial planning and understanding overall tax obligations.