What Are Social Security Wages?
Social Security wages are the employee earnings that are subject to Social Security tax withholding under U.S. federal payroll rules. Both the employee and employer contribute toward Social Security. Each pays 6.2% (based on tax year 2020 rates) on eligible taxable wages.
These taxes help fund retirement benefits, survivor benefits, disability benefits, and other Social Security programs.
What Is Counted as Social Security Wages?
Most types of compensation that an employee receives for work performed are included. This usually covers:
- Hourly wages and base salary
- Paid time off (PTO)
- Bonuses
- Commissions
- Sick pay
- Elective retirement contributions
- Payments in forms other than cash
- Tips over $20 per month
For 2021, Social Security wages were subject to a wage cap of $142,800 — meaning earnings above this limit were not taxed for Social Security in that tax year.
What Is Not Included in Social Security Wages?
These types of payments are generally excluded:
- Tips less than $20 in a month
- Reimbursed travel expenses
- Employer-paid health or accident insurance
- Employer HSA contributions
- Workers’ compensation benefits
- Payments made to family employees under 18
- Certain statutory non-employee payments
- Wages paid to workers who qualify as exempt or disabled within applicable regulations
Are Tips Included?
Yes — tips are included in Social Security wages only when total tips exceed $20 per month. These include:
- Cash tips directly from customers
- Electronic tips (credit card / debit card tips)
- Tips earned through tip pools / split arrangements
- Non-cash tip value if applicable
Resource for Employers + Employees
If you ever need to calculate pay information correctly from Social Security wages or generate pay stubs for record keeping or income verification — you can use online stub tools such as:
Paystub Generator Free (for U.S. pay frequencies including semi-monthly, biweekly, weekly and monthly) — https://paystubgeneratorfree.com/
This makes pay record keeping easier especially when taxes like Social Security need to be shown or calculated clearly.
