The taxable maximum normally increases each year. (For reference, it's set at $168,600 for 2024.) In other words, if you are lucky enough to make $175,000 in 2024, you would pay a 12.4 percent Social Security tax on every dollar earned up to $168,600, but then stop paying the Social Security tax after that.
If you are under full retirement age for the entire year, we deduct $1 from your benefit payments for every $2 you earn above the annual limit. For 2025, that limit is $23,400. In the year you reach full retirement age, we deduct $1 in benefits for every $3 you earn above a different limit.
Exempt Amounts for 2025
We determine the exempt amounts using procedures defined in the Social Security Act. For people attaining NRA after 2025, the annual exempt amount in 2025 is $23,400. For people attaining NRA in 2025, the annual exempt amount is $62,160.
The Bottom Line. A few groups are exempt from paying taxes into the Social Security system. Most foreign academics and researchers are exempt if they're nonimmigrant and nonresident aliens. Self-employed workers who make less than $400 annually don't have to pay Social Security taxes, either.
Some jobs, like state and town government positions, don't pay Social Security taxes and therefore don't contribute to your eligibility.
The types of earnings (or compensation payments) that are excluded from Social Security wages include: Tips (if they total less than $20 per month) Reimbursed business travel expenses. Employer-paid health or accident insurance premiums.
Unemployment compensation generally is taxable. Inheritances, gifts, cash rebates, alimony payments (for divorce decrees finalized after 2018), child support payments, most healthcare benefits, welfare payments, and money that is reimbursed from qualifying adoptions are deemed nontaxable by the IRS.
Have you heard about the Social Security $16,728 yearly bonus? There's really no “bonus” that retirees can collect. The Social Security Administration (SSA) uses a specific formula based on your lifetime earnings to determine your benefit amount.
If your spouse dies, do you get both Social Security benefits? You cannot claim your deceased spouse's benefits in addition to your own retirement benefits. Social Security only will pay one—survivor or retirement. If you qualify for both survivor and retirement benefits, you will receive whichever amount is higher.
At full retirement age, you can "suspend" your Social Security benefit without the need to repay it. Choosing to suspend will stop your monthly benefits and those of any dependent family members (except a divorced spouse).
The proportion of total earnings that is subject to the Social Security tax has declined over time because the earnings of the highest-paid individuals have increased more quickly than those of other workers.
Working While Receiving Social Security Benefits
Once you reach your full retirement age, you can earn any amount of money, and the SSA won't reduce your benefits.
Answer: The new law will increase your own earned Social Security retirement benefit by removing the WEP that caused a reduced benefit to be paid. The new law will also remove the reduction on the spousal benefit that your spouse has earned for you that was caused by the GPO.
Employees and employers are each required to pay a 6.2% tax on wages. In 2025, the limit is $176,100, which means you'll pay no more than $10,918.20 in Social Security taxes ($176,100 x 6.2%) in 2025. This tax cap rises each year, increasing from $168,600 in 2024 and $160,200 in 2023.
For the earnings limits, we don't count income such as other government benefits, investment earnings, interest, pensions, annuities, and capital gains.
Key Takeaways. Income excluded from the IRS's calculation of your income tax includes life insurance death benefit proceeds, child support, welfare, and municipal bond income. The exclusion rule is generally, if your "income" cannot be used as or to acquire food or shelter, it's not taxable.
What are the tax obligations when selling a car? If you sell a vehicle (car, truck, motorcycle, boat, or other vehicle for personal use) for a loss, the IRS is generally not interested in the transaction. However, if you sold the car for a profit, you may be required to report that profit as a capital gain.
Social Security withholds benefits if your earnings exceed a certain level when you're under your full retirement age. In 2024, the annual exempt amount is $22,320 for recipients who aren't at their full retirement age. Anyone making more than that has $1 in benefits withheld for every $2 of earnings they're over.
Some government and railroad employees are not eligible for Social Security. American expatriates retiring in certain countries—and some retired immigrants to the U.S.—can't collect Social Security benefits. Divorced spouses married for fewer than 10 years cannot claim benefits based on the earnings of their ex-spouse.
To qualify to get $144 added back to your Social Security check, you can enroll in a Medicare Advantage plan that offers a Part B premium reduction or giveback benefit.
Only earned income is taken into consideration when it comes to your Social Security benefits. This means income earned from wages, salaries, and tips from a full-time, part-time, contract, freelance, or self-employed job.
Earned income does not include: Pay you got for work when you were an inmate in a penal institution. Interest and dividends. Pensions or annuities.
Children under 18 who work for their parents in a family-owned business also do not have to pay Social Security taxes. Likewise, people under 21 who work as housekeepers, babysitters, gardeners or perform similar domestic work are exempt from this tax.