President Franklin D. Roosevelt signed the Social Security Act on August 14, 1935. Social Security taxes were first collected in January 1937, with workers and employers each paying one percent of the first $3,000 in wages and salary.
In 1939 President Roosevelt signed legislation establishing benefits for survivors and dependents.
Early retirement benefits, allowing people to draw checks at age 62, were enacted in 1956 for women and in 1961 for men.
Disability payments were enacted in 1956 and initially were payable only to workers aged 50-64.
Payments to divorced wives began in 1965, and to divorced husbands in 1977.
President Nixon signed legislation in 1972 authorizing a 20 percent cost-of-living adjustment (COLA) and making the COLA automatic each year.
President Reagan signed legislation in 1983 providing for taxation of benefits, and for a gradual increase in the age of full retirement benefits to 67.
President Clinton signed legislation in 2000 eliminating the retirement earnings test for people above the full-benefit retirement age. The earnings test required beneficiaries to give up part of their Social Security benefits when they earned in excess of a certain amount. It still applies to beneficiaries below the full-benefit age.
In 2011 and 2012, a “payroll tax holiday” temporarily reduced the Social Security tax rate for workers from 6.2 to 4.2 percent. The lost revenue to the Social Security program was reimbursed from the federal government’s general revenues.
In 2015, Congress passed the Bipartisan Budget Act, which reallocated the portions of the 6.2 percent payroll tax paid by workers and their employers going to DI and OASI. Prior to January 1, 2016, 0.9 percent was allocated to the DI Trust Fund, and the remaining 5.3 percent was allocated to OASI. As a result of this law, 1.185 percent was allocated to the DI trust fund and 5.015 percent was allocated to the OASI Trust Fund for the period January 1, 2016 through December 31, 2018. After 2018, the allocation of Social Security payroll contributions will revert to what it had been for the years 2000 through 2015.
For more information on the history of Social Security, see: