Jobs That Don’t Pay Into Social Security Explained

Most American workers pay into Social Security through payroll taxes, ensuring they receive benefits in retirement. However, some jobs are exempt, affecting future eligibility.

Understanding which positions do not contribute to Social Security is essential for financial planning. Several categories of workers fall under different retirement systems or exemptions, meaning they won’t automatically earn Social Security credits.

Former Federal Positions Under Alternative Systems

Before 1984, many federal employees were covered by the Civil Service Retirement System (CSRS), which operated separately from Social Security. Established in 1920, CSRS provided retirement, disability, and survivor benefits without requiring payroll contributions to Social Security. Instead, employees contributed a portion of their salary to CSRS, with the government making additional contributions. Because these workers did not pay Social Security taxes, they typically do not qualify for benefits based on their federal employment unless they also worked in Social Security-covered jobs.

The Federal Employees Retirement System (FERS) replaced CSRS for employees hired in 1984 or later. Unlike CSRS, FERS integrates Social Security, requiring payroll tax contributions. However, those who remained under CSRS or receive a CSRS pension may face reductions in any Social Security benefits they qualify for through other employment. The Windfall Elimination Provision (WEP) can reduce Social Security payments for individuals who receive a pension from non-covered employment, while the Government Pension Offset (GPO) affects spousal and survivor benefits, often eliminating them entirely.

Certain State and Local Government Roles

Many state and local government employees participate in retirement systems that do not include Social Security. Instead of paying the standard 6.2% payroll tax, these workers contribute to alternative pension plans. This exemption is most common among teachers, police officers, firefighters, and other public sector employees in states that have opted out of Social Security coverage.

The Social Security Amendments of 1950 allowed states to enter into voluntary agreements, known as Section 218 Agreements, to provide coverage for public employees. However, not all states participated fully. As a result, some government workers rely solely on state pension funds.

For example, employees in states like Ohio, Massachusetts, and Texas may be enrolled in pension systems such as the Ohio Public Employees Retirement System (OPERS) or the Texas Teacher Retirement System (TRS), which operate independently of Social Security. Workers in these systems do not earn Social Security credits through their government employment and may need to accumulate qualifying work credits through private sector jobs to be eligible for benefits. Additionally, those who receive pensions from non-covered employment and later qualify for Social Security may see their benefits reduced under provisions designed to prevent “double-dipping.”

Railroad Workers Under the Railroad Retirement System

Railroad employees fall under a distinct retirement system separate from Social Security, known as the Railroad Retirement System (RRS). Established in the 1930s, this system was designed to address the frequent job changes common in the railroad industry. The Railroad Retirement Act created a federally administered pension program that provides retirement, disability, and survivor benefits.

Unlike Social Security, which is funded through payroll taxes on both employees and employers, the Railroad Retirement System operates with tiered benefits. Workers contribute a percentage of their wages, similar to Social Security taxes, but the structure includes two tiers. The first tier mirrors Social Security, calculating benefits based on earnings and work history, while the second tier functions more like a private pension, providing additional retirement income. Employers pay higher payroll taxes to support this system, with rates exceeding standard Social Security contributions.

Eligibility for Railroad Retirement benefits requires a minimum number of service years—typically at least 10 years under the system or five years if performed after 1995. Those who meet these requirements receive benefits that can be more generous than Social Security, particularly for long-term employees. However, individuals who transition between railroad employment and jobs covered by Social Security must navigate complex benefit coordination rules.

Specific Religious Exemptions

Certain religious groups can obtain exemptions from Social Security taxes if their beliefs oppose participation in government-funded insurance programs. This exemption is most commonly associated with religious sects that maintain their own financial support systems for members, such as the Amish and Mennonites.

Under Section 1402(g) of the Internal Revenue Code, individuals who are members of a recognized religious group that has existed continuously since at least 1950 and provides for its dependent members can apply for an exemption from Social Security and Medicare taxes. To qualify, individuals must file IRS Form 4029, certifying that their religious principles prohibit them from accepting Social Security benefits. If approved, they are relieved of payroll tax obligations but also forfeit any future claims to Social Security. Employers who share the same religious affiliation and operate within the community may also qualify, meaning neither the employer nor the employee contributes to Social Security.