Social Security payroll tax investment & finance definition

A tax paid in equal amounts by companies and employees, whose contributions are deducted from their paychecks. Self-employed workers can deduct one-half of their Social Security payment from their taxes. In 2002, the Social Security tax was 12.4 percent of a worker’s wages, up to $84,900. The Social Security payroll tax started in 1937 at a rate of 2 percent.