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What is Social Security Tax? A Simple Explanation for Kids, Teens and Beginners

What is Social Security Tax? Taxes 101: Easy Peasy Finance for Kids and Beginners

Introduction to Social Security Tax for Kids and Teens

This video explains the concept of social security tax in a simple, concise way for kids and beginners. It could be used by kids & teens to learn about social security tax, or used as a money & personal finance resource by parents and teachers as part of a Financial Literacy course or K-12 curriculum.

What is Social Security Tax - A Simple Explanation for Kids Teens and Beginners
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Suitable for students from grade levels:

  • Kindergarten
  • Elementary School
  • Middle School
  • High School

The topics covered are:


What is social security tax?

Social security tax is a mandatory payroll tax paid by employers and employees.

Social Security Tax for Kids Teens and Beginners
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It is used to fund the Social Security program, which provides retirement, disability, and survivorship benefits to millions of Americans each year.

In 2022, the social security tax rate is 12.4% – half of it is paid by the employer, and the rest is paid by the employee.

While the social security tax rate rarely changes, there is an income limit up to which the tax is applicable. This changes every year to keep up with inflation.

For 2022, this limit is $147,000.

Do self-employed people also need to pay social security tax?

That’s a good question! Just like everyone else, people who are self-employed have to pay social security tax.

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However, it isn’t automatically withheld from their paycheck, because there is no employer. They also have to pay the full 12.4% social security tax, because they are both the employer and employee.

However, they can lower their taxable income by claiming the employer portion of the Social Security tax as a deduction.

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Does the Social Security tax I pay get paid back to me when I retire?

Not exactly. The Social Security tax you pay is not put into a retirement account for you. Instead, it is used to fund the Social Security payments to existing beneficiaries.

When you retire, you become eligible to claim Social Security benefits, and the program will be funded by the people working and paying Social Security tax at that time.

Does everyone need to pay Social Security tax?

Social Security Tax - How it works and who needs to pay
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While it is mandatory for most people, there are some exceptions.

For instance, members of certain religious groups who don’t want to receive Social Security benefits, temporary students, and foreign government employees can claim an exemption.

Children under 18 who work in a family owned business are also exempt from Social Security tax.


Download Transcript: Ideal for Use by Teachers in their Lesson Plan to Teach Kids & Teens


What is Social Security Tax
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