Tax rates for Social Security are set by law, and each employer and employee pays these taxes. Employees pay 6.2 percent of taxable earnings to Social Security funds, as of 2015. Social Security taxes pay for the Old Age and Survivors Insurance Trust Fund and the Disability Insurance Trust Fund.
The rate of 6.2 percent was first set in 1990. Self-employed individuals pay twice that amount at 12.4 percent. Of the 6.2 percent, 5.3 percent of taxable income pays for the Old Age and Survivors Insurance Trust Fund. The other 0.9 percent goes towards the Disability Insurance Trust Fund. These split percentages were first used in 2000.
The maximum wage subject to Social Security taxes for earnings in 2015 is $118,500. Taxes change for agricultural employees. Employees and employers must also pay a Medicare tax of 1.45 percent each, or 2.9 percent total. Self-employed individuals pay 2.9 percent in Medicare taxes.
Employees and employers paid a rate of 1 percent in 1937 when the Social Security tax was first issued during the Great Depression. This rate continued until 1949. Disability insurance taxes were not added to Social Security until 1957. The Social Security tax rate climbed to 3 percent in 1960, 4.2 percent in 1969 and 5.05 percent in 1978.