Social Security Taxes

You pay ביטוח לאומי taxes out of your paychecks to help provide retirement, disability and survivors benefits. You’ll receive a Social Security Statement each year to see how much you have earned.

A key feature of current social protection is its reliance on mandated contributions – and its exclusion of informal workers (figure 6.4). It can also make employing people more expensive for firms.


Most employers and employees (over 16 years of age) pay social insurance contributions, known in Ireland as PRSI, into the national Social Security fund. This is based on the number of ‘insurable weeks’ in a year and is compulsory. People who have unearned income such as savings or investments also pay a 4% charge called a self-assessment.

Otto von Bismarck is widely credited with inventing the concept of social insurance–benefits for workers in formal wage employment financed by dedicated taxes on wages. While successful in rich countries, this model is ill-suited for developing ones where formal and stable employment are less common. A reformed system would supplement social assistance with a universal basic income that does not depend on mandatory earnings-based contributions. Instead, it could be financed by a combination of subsidies for low-income workers and market-based “nudged” savings.

Survivor benefits are available to spouses and children of Social Security beneficiaries who have died. They provide a monthly cash payment that can help with the cost of food, clothing and shelter.

SSI is a federal program that provides supplemental income to poorer individuals who cannot work or do not have enough work-based income to support themselves. Applicants must meet certain age, disability and dependency requirements. In addition, SSI recipients must have paid into the system through payroll taxes or earned a certain amount of credits through other means.


In the United States, most workers are covered by Social Security’s retirement, survivor and disability insurance programs. In addition, nine out of 10 people with disabilities who work receive Medicaid, which covers health care and long-term services and supports. Many also buy in to Supplemental Security Income, which provides a basic benefit to low-income children and adults with disabilities.

Developing countries are continuing to expand their social assistance systems, including conditional cash transfer programs such as Ethiopia’s Pantawid and Tanzania’s Productive Safety Net Program. They are also moving toward universal approaches, extending coverage beyond those in contracted and regulated standard employment relationships. These changes can help reduce barriers to participation and address challenges posed by the traditional financing model, which limits coverage and excludes informal workers.

Your Social Security Statement shows your year-by-year earnings and provides estimates of the retirement, survivor and disability benefits you can expect to receive now and in the future. You can also get estimates of the cost of Medicare, the federal hospital insurance program, for yourself and your family.

The amount you pay for social insurance depends on your work history, including the number of credits (previously called quarters of coverage) you earn. We use these credits to determine whether you have fully insured status, currently insured status or are establishing a period of disability.


The Social Security system provides a comprehensive package of unemployment and disability benefits. It also provides for medical coverage and other protections that can help with the cost of living. These schemes receive very high levels of state support and form part of Uzbekistan’s social protection floor, ensuring access to basic income security for all citizens of working age.

All wages paid for work performed are covered under Social Security unless the employer specifically excludes them from coverage or they are excluded by federal law. Wages include cash, food stamps, vouchers for medical care and other services, and other forms of payment. The Social Security Administration is responsible for determining the maximum amount of earnings that qualify for credits. The Commissioner determines this amount each year and publishes it in the Federal Register.

You can check the amount of your current taxable earnings by using our estimator. This tool will also show you the amounts of retirement, survivor and disability benefits you can expect to receive in the future. Your Personal Earnings Statement, which you will receive three months before your birthday, shows how much you have earned in the past year and also provides estimates of your future benefits.

Your surviving spouse can choose to receive an SBP annuity based on 55 percent of your elected base amount, which can vary from a minimum of $300 to a maximum of full retired pay (or, in the case of a REDUX retiree, the highest-of-the-high-three annuity). Your base amount and your annuity will increase at the same rate that cost-of-living adjustments are made to your retired-pay benefit.


Generally, your Social Security benefits are not subject to income tax. But some benefits are taxable, such as a lump-sum death benefit for an insured worker who dies at work. If you are self-employed, you may need to pay taxes on your earnings. You can make a choice about whether or not to have taxes withheld from your earnings by filling out Form W-4P. You can also find a withholding calculator on our Services Online retirement tool.

If you are self-employed, you may have to pay tax on your earnings based on the type of trade or business you operate. To determine your type of trade or business, we look at the kind of work you do and how much you earn. We then compare that to the average wage in your industry. We use the results of our calculation to help determine your tax bracket.

We subtract your pension and permanent health insurance contributions from your gross wages to get ‘taxable pay’. Then we add in your income tax rate band and universal social charge (USC) deductions. You can find the rate bands and the USC rates that apply to you in our Tax Rates, Bands, & Reliefs charts.

If you are a widow or widower, you can get monthly survivors benefits after the death of your spouse. You can also get a lump-sum payment when you become eligible for a Social Security death benefit at any age.

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