Which types of income are exempt from Social Security tax in 2026 (e.g., retirement plan distributions, certain fringe benefits)?

1. The headline exemption: income above the 2026 wage base is not taxed

For 2026 the Social Security taxable wage base — the cap on earnings subject to the 6.2% OASDI payroll tax — is $184,500, meaning every dollar earned above that amount is not subject to Social Security payroll taxes for that year ^{[1] [5] [2]}.

2. Statutory and narrow group exemptions: religious objections and certain employers

A small set of statutory exemptions allows some workers not to pay into Social Security at all; historically this includes members of certain recognized religious sects that conscientiously oppose all insurance benefits and some employees of foreign governments under specific circumstances, and these exemptions continue to exist in current guidance ^{[1] [2]}.

3. The earnings test and exempt amounts for retirees who work

Beneficiaries who receive Social Security and also work may have portions of their benefits withheld if their earnings exceed the annual exempt amounts under the retirement earnings test; the Social Security Administration publishes those lower and higher exempt amounts and automatic determinations each year that dictate how much benefit is withheld for excess earnings ^{[6] [3]}.

4. Payroll-tax mechanics versus income taxation of benefits — a source of confusion

Reporting and legislation in 2025–2026 have created public confusion between the Social Security payroll tax (the 6.2% OASDI withheld from wages up to the wage base) and the income taxation of Social Security benefits (whether benefits are included in taxable income when filing federal or state returns); recent bills and state moves aim at changing income-tax treatment but do not uniformly change who pays payroll taxes on wages ^{[7] [8] [9]}.

5. What the sources do not confirm about retirement-plan distributions and fringe benefits

None of the provided sources give a definitive list stating that distributions from IRAs, 401(k)s or other retirement plans are categorically exempt from Social Security payroll tax; similarly, the reporting here does not comprehensively list which fringe benefits (health insurance, employer-provided meals, transit benefits, etc.) are excluded from OASDI withholding, so the current material cannot authoritatively claim those items are exempt or taxable under payroll rules (limitation: reporting does not cover this point directly) (no direct source).

6. Practical takeaways and the political backdrop

Practically, most workers will pay the 6.2% Social Security payroll tax on wages up to $184,500 in 2026, a figure set by SSA rules and reported widely ^{[1] [5]}, while a handful of narrow statutory exceptions and the earnings-test rules can alter withholding for particular individuals ^{[1] [3]}. Politically charged proposals and some new laws affecting income taxation of benefits have led to misinterpretations — for example, legislative proposals to exclude Social Security from gross income or to create larger senior deductions have been mistaken by some commentators for wholesale elimination of payroll taxes, a conflation the tax-policy press and professional analysts have repeatedly warned against ^{[7] [8] [10]}.

7. Where to look next and what to verify for an individual case

Verification for any specific employment situation requires reviewing SSA guidance on exemptions and the employer’s payroll classification, since the SSA and IRS rules that determine payroll-tax liability (wage base, statutory exemptions, and earnings-test withholding) are the final authorities; the Social Security Administration’s pages on exempt amounts, the earnings test, and the 2026 COLA and tax-rate notices are the primary references to consult for precise calculations ^{[6] [3] [4]}.