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KXLY Posted: Updated: March 6, 2021 4:53 AM If you receive a paycheck, you’re probably well acquainted with a little line item that says “Social Security Tax.” Although many people most associate it with our nation’s troubled retirement financing infrastructure, Social Security still provides income and benefits to older Americans and those who can no longer provide for themselves due to disability. How Does Social Security Work? Social Security is a pay-as-you-go program in which workers and employers contribute a portion of their wages to fund current benefits. As of 2021, employees and employers each pay 6.2% of wages every pay period on up to the first $142,800 of wages earned per year. If you’re self-employed, you must act as both the employee and employer, which means you contribute 12.4% each year.

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