Learn About Social Security Tax Rules in California

Understanding Social Security Tax in California

Social Security tax is a payroll tax that both workers and employers pay to fund the Social Security program. In California, like all states across the United States, Social Security tax works the same way under federal law. As of 2024, employees pay 6.2% of their wages toward Social Security, while employers contribute an additional 6.2%. Self-employed individuals pay both portions, totaling 12.4% of their net earnings.

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The Social Security Administration (SSA) uses these tax contributions to create a record of your earnings history. This record becomes important later when you become eligible to receive retirement benefits, disability benefits, or survivor benefits. California residents pay the same Social Security tax rate as people in every other state, since Social Security is a federal program, not a state program.

The earnings that are subject to Social Security tax have a wage base limit. For 2024, workers only pay Social Security tax on earnings up to $168,600 per year. Once earnings exceed this amount, no additional Social Security tax is withheld. This limit changes annually based on national wage trends. Someone earning $200,000 per year would only pay Social Security tax on the first $168,600 of income.

Understanding how much you contribute matters because your contribution history directly shapes the benefits you might receive later. The SSA tracks your earnings each year, and your future benefit amount will depend on your highest 35 years of earnings. For California workers, this means that every year you work and contribute to Social Security builds your record toward potential future benefits.

Practical Takeaway: Review your Social Security statement online through your personal account at ssa.gov to see your current earnings record and estimated benefits based on your contribution history.

How Social Security Tax Withholding Works for Employees

When you receive a paycheck in California, your employer automatically deducts Social Security tax from your gross pay. This is called payroll withholding. Your employer sends the withheld amount, along with their matching contribution, to the U.S. Treasury on your behalf. You can see this deduction on your pay stub labeled as "Social Security" or "FICA" (Federal Insurance Contributions Act).

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The amount withheld depends on your income level and whether you have filed a W-4 form with your employer. W-4 forms are federal tax forms that help determine how much federal income tax should be withheld from your paycheck. However, for Social Security tax specifically, the withholding rate is fixed at 6.2% up to the wage base limit—there is no way to adjust this amount through your W-4.

Some California workers might have multiple jobs. If you work more than one job, it's important to understand that you could pay more Social Security tax than necessary if your combined earnings from all jobs exceed the annual wage base limit. For example, if you earned $100,000 at one job and $80,000 at another job in 2024, you would have paid Social Security tax on the total $180,000 combined. Since the limit was $168,600, you overpaid by approximately $770 in Social Security tax (6.2% of the excess $12,400). You can claim this overpayment on your federal income tax return when you file.

California has no separate state Social Security tax. The state of California does not collect its own Social Security tax on workers. All Social Security tax contributions go directly to the federal program. However, California does have state income tax, and that is withheld separately from your paycheck at a rate determined by your income level and W-4 information.

Practical Takeaway: If you work multiple jobs, track your combined earnings throughout the year so you can account for any overpaid Social Security tax when filing your federal income tax return.

Self-Employment and Social Security Tax in California

Self-employed individuals in California face different Social Security tax rules than traditional employees. As a self-employed person, you are responsible for paying both the employee portion (6.2%) and the employer portion (6.2%) of Social Security tax, for a total of 12.4%. This is called self-employment tax, and it is calculated on your net earnings from self-employment.

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Net self-employment earnings are your business income minus business expenses and a deduction for half of your self-employment tax. For example, if your business had gross revenue of $80,000 and legitimate business expenses of $20,000, your net earnings would be $60,000. You would then calculate your self-employment tax based on this $60,000 figure (with the self-employment tax deduction applied). Self-employed individuals pay this tax by filing Schedule SE with their annual federal income tax return.

Self-employed Californians also do not pay state Social Security tax to California. However, they do pay California state income tax on their net business income. Additionally, some self-employed people in California may be subject to the Self-Employment Contributions Act (SECA) tax, which is a federal obligation, not a state one.

It's important for self-employed workers to understand that paying self-employment tax is how you build your Social Security earnings record, just as wage earners do through payroll withholding. Each year you pay self-employment tax on eligible income, the SSA records your contribution toward your future retirement, disability, or survivor benefits. A California freelancer, independent contractor, or small business owner who consistently pays self-employment tax is building the same Social Security record as someone who works for a corporation.

Many self-employed people find it helpful to set aside money throughout the year for self-employment tax, since it is not automatically withheld like it is for employees. Some choose to make quarterly estimated tax payments that include both income tax and self-employment tax to avoid owing a large amount at tax time.

Practical Takeaway: Keep detailed records of your business income and expenses throughout the year to accurately calculate your net self-employment earnings and the self-employment tax you owe on Schedule SE.

Social Security Tax Rules for Different Types of Work in California

Not all types of work in California are subject to Social Security tax. Understanding which work is covered helps you know whether you are building a Social Security record. The vast majority of employment is covered, including traditional W-2 jobs, self-employment, and work done as an independent contractor with a 1099 form. Railroad employees have a different system through the Railroad Retirement Board, but their benefits are similar to Social Security.

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Some types of work are specifically excluded from Social Security tax. Students who work for the school or college they attend do not pay Social Security tax on those wages, though they may still pay federal income tax. Some government employees hired before specific dates may not have Social Security tax withheld, though most modern government workers do contribute. Family members employed by a family-owned business may be exempt in certain situations, though the rules are specific. Agricultural workers employed on a small farm and paid in cash may be exempt if earnings fall below a certain threshold.

Household workers, such as nannies, housekeepers, or elder care workers in California, may or may not be subject to Social Security tax depending on how much they earn. If a household worker earns $2,700 or more from one employer in 2024, the employer must pay Social Security tax on their wages. This threshold changes annually. Many California households employ household help, and understanding these rules helps ensure compliance with federal law.

Certain religious groups are allowed to opt out of Social Security as part of their faith tradition, but this requires filing a specific form (Form 4029) with the IRS. Once approved, members are exempt from both paying and receiving Social Security benefits. However, most workers in California do not fall into any exemption category and will pay Social Security tax on their earnings.

Volunteer work is not subject to Social Security tax unless it is performed for a wage-paying employer. Someone who volunteers for a nonprofit organization without pay does not contribute to Social Security through that work. However, if that same person works part-time for compensation at the organization, that compensated work would be subject to Social Security tax.

Practical Takeaway: Review your employment situation to confirm you are subject to Social Security tax; if you believe you may fall into an exempt category, research the specific rules or consult with a tax professional.

Earnings Records and the Impact on Future Benefits

Every time you pay Social Security tax in California—whether as an employee, self-employed person, or

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