How to Calculate Box 3 Social Security Wages on Your W2
Understand how your W2 Box 3 Social Security wages are determined and verify their accuracy for tax and future benefit purposes.
The W-2 form, a tax document, includes Box 3, which reports your Social Security wages. This figure is important for your tax calculations and future Social Security benefits. Understanding the amount in Box 3 helps confirm the accuracy of your tax reporting and ensures your earnings are correctly credited toward your Social Security record.
Understanding Box 3 Wages
Social Security wages represent the portion of an employee’s earnings subject to Social Security tax, which helps fund Social Security benefits. Box 3 on the W-2 form shows the total amount of earnings an employee accrued during the year that are subject to this specific tax. This figure contributes to the Social Security system by reflecting the wages upon which both the employee and employer pay their share of Social Security taxes.
The amount reported in Box 3 often differs from the federal taxable wages shown in Box 1 of your W-2. This difference arises because certain pre-tax deductions, which reduce your federal taxable income, do not similarly reduce your Social Security wages. Recognizing this distinction is important for understanding how your various earnings and deductions are treated for different tax purposes.
Components of Social Security Wages
Social Security wages generally include most forms of compensation an employee receives, such as regular salaries, hourly wages, bonuses, commissions, and paid time off, such as sick leave and vacation pay. Tips exceeding $20 per month are also considered Social Security wages.
A key distinction for Box 3 wages involves pre-tax deductions. While contributions to plans like 401(k)s, 403(b)s, and 457(b)s, as well as traditional IRAs, reduce your federal taxable wages (Box 1), they do not reduce your Social Security wages. Similarly, pre-tax deductions for Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs) also typically do not lower the amount reported in Box 3. This means your Box 3 amount is often higher than your Box 1 amount due to these specific pre-tax contributions.
Applying the Social Security Wage Base
The Social Security system includes an annual wage base limit, which is the maximum amount of earnings subject to Social Security tax in a given year. For 2025, this limit is $176,100. This means any income earned above this amount is not subject to Social Security taxes. If an employee’s total wages exceed this annual limit, only the portion of earnings up to the wage base is included in Box 3 of their W-2 and taxed for Social Security.
This limit changes annually based on the national average wage index. This cap applies per person, per year, regardless of whether an individual works for one employer or multiple employers during the year. Once an employee’s cumulative earnings reach this limit, no further Social Security tax is withheld from their pay for the remainder of that year.
Verifying Your Box 3 Figure
To confirm the accuracy of Box 3 on your W-2, you can compare it with the year-to-date (YTD) Social Security wages found on your final pay stub for the year. This comparison helps identify any discrepancies between what your employer reported on your W-2 and your own payroll records.
If you believe there is an error after reviewing your records, contact your employer’s payroll department. They can provide clarification and, if necessary, issue a corrected W-2 form, known as a W-2c. Maintaining accurate pay stubs throughout the year simplifies this verification process.