Do I Still Pay Social Security Tax After Retirement?
Learn how Social Security taxes apply after retirement, including how earnings, freelance work, and tax withholding may affect your benefits.
Many retirees wonder whether they must continue paying Social Security taxes after leaving the workforce. While traditional payroll taxes stop when regular wages end, some types of income remain subject to these deductions. Understanding how Social Security taxes apply in retirement can help avoid surprises.
Tax on Earnings While Receiving Social Security
Receiving Social Security benefits does not exempt retirees from payroll taxes if they continue working. Wages from an employer remain subject to the 6.2% Federal Insurance Contributions Act (FICA) tax on earnings up to $168,600 in 2024. Employers match this amount.
Self-employed retirees bear the full 12.4% Social Security tax under the Self-Employment Contributions Act (SECA) but can deduct half when filing their federal return. The same $168,600 income cap applies, so earnings beyond this threshold are not taxed for Social Security.
If You Take on Freelance or Contract Work
Retirees earning income through freelance or contract work must manage their own Social Security contributions. Unlike employees, independent contractors do not have payroll taxes automatically withheld and must pay the full 12.4% Social Security tax, plus a 2.9% Medicare tax, totaling 15.3%.
To avoid penalties, freelancers and contractors typically make estimated tax payments each quarter and file Schedule SE (Form 1040) with their return. Business expenses such as home office costs, equipment, and work-related travel can be deducted to lower taxable income. Keeping detailed records ensures accurate reporting.
Tax Withholding on Social Security Payments
Social Security benefits may be subject to federal income tax depending on total income. The IRS calculates “combined income” by adding adjusted gross income (AGI), nontaxable interest, and half of Social Security benefits. If this total exceeds $25,000 for individuals or $32,000 for married couples filing jointly, a portion of benefits becomes taxable. Up to 50% of benefits may be taxed for individuals with combined income between $25,000 and $34,000, and up to 85% for those exceeding $34,000. For married couples, the 85% threshold starts at $44,000.
To avoid a tax bill, retirees can request voluntary withholding from Social Security payments using Form W-4V. The IRS offers fixed withholding rates of 7%, 10%, 12%, or 22%. Without withholding, retirees may need to make quarterly estimated tax payments in April, June, September, and January.