Social Security tax is a FICA tax on wages which provides most of the funding for Social Security. The tax is 12.4% of an employee’s wages, but the tax cost is split between the employee and employer with each paying 6.2%. This tax only applies up to a certain amount of wages called the maximum wage base which changes every year with the 2021 maximum being $142,800. This means that in 2021 no wages above $142,800 would incur Social Security taxes. This is to be contrasted with Medicare taxes which apply to all income.
[Last updated in July of 2021 by the Wex Definitions Team]