The percentage of Social Security tax that will be deducted from a workers pay in 2011 is 4.2 percent of earnings. The maximum amount on which this tax is imposed for the year 2011 remains at $106,800. This is the same maximum amount of earnings as the year 2010. The percentage of Social Security tax and the maximum amount of earnings on which this tax is imposed may increase each year, but did not increase for 2011 because there was no increase in the cost of living. A Medicare tax is also deducted from a workers paycheck. Presently, this is an additional 1.45 percent of earnings. There is no maximum amount of earnings on which this tax is imposed.

The Senior Citizens Freedom to Work Act eliminated the Social Security retirement earnings test in and after the month in which a person reaches regular retirement age. However, the Senior Citizens Freedom to Work Act does not repeal the present maximum that can be earned without a reduction in Social Security benefits between ages 62 and 66. The maximum amount that a worker under 66 can earn without a reduction in Social Security benefits in the year 2011 remains at $14,600. The maximum that can be earned without a reduction in Social Security benefits may be adjusted by Congress each year. For every $2 earned over the limit, $1 is withheld from Social Security benefits. However, during the calendar year in which a worker born in 1944 attains age 66, the amount that can be earned prior to his or her birth month without a reduction in Social Security benefits in the year 2011 is $37,680. Thereafter, there is a $1 reduction in Social Security benefits for every $3 earned in excess of $37,680 before attaining age 66. Only wages and net self-employment income count toward the Social Security earnings limit. Income from savings, investments, interest, pensions, annuities, capital gains or insurance will not affect a retired worker’s benefits. Failure to inform the Social Security Administration of any excess earnings by April 15th of the year following the excess earnings may result in the imposition of an additional penalty. A person can earn an unlimited amount of income without a penalty after attaining age 66.

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