(C) Common Dreams
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How is Social Security financed? [1]
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Date: 2023-03
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 $160,200 (in 2023), while the self-employed pay 12.4 percent.
In 2021, $980.06 billion (90.1 percent) of total Old-Age and Survivors Insurance and Disability Insurance income came from payroll taxes. The remainder was provided by interest earnings $70.1 billion (6.4 percent) and revenue from taxation of OASDI benefits $37.6 billion (3.4 percent).
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 earnings base, rises as average wages increase.
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[1] Url:
https://www.ssa.gov/news/press/factsheets/HowAreSocialSecurity.htm
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