Social Security tax

A tax that pays for retirement benefits, disability benefits, and survivor’s benefits that are paid to retired workers, disabled people, widows, and orphaned children. Half of this tax is deducted from employees’ paychecks, the other half paid by the employer. Self-employed individuals have to pay the entire amount. Typically the tax rate, as well as the amount of wages that are subject to the tax, varies each year. Also referred to as FICA (Federal Insurance Contribution Act) tax.