Soldiers, sailors, marines and airmen pay social security taxes on their wages just like every other American. When the Social Security Administration began in 1935, military members did not pay social security taxes. In 1957, when the military first withdrew social security deductions from military members' paychecks, military wages were very low. Congress has since established programs that provide additional social security credits for many veterans. Veterans should have their discharge papers with them when they apply for social security.
Early Years
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Active duty military members who served from 1940 to 1956 did not have social security taxes deducted from their wages. To make up for the years when servicemen were not able to participate in the program, extra credits have been applied to veterans' social security accounts. For every month of active military service during this period, $160 a month in credits will be added to each veteran's social security account. Eligibility is based on a honorable discharge after at least 90 days of service. You do not need 90 days of service if you were injured in the line of duty. You are not eligible for the credits if you are receiving a federal retirement benefit for the same period. If you were still on active duty after 1956, you will receive the extra credits for the period of 1951 through 1956.
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Middle Years
Beginning in 1957, the wages of active-duty military personnel have been taxed for social security participation, including reservists during periods of training on active duty. Military members with active duty service from 1957 through 1967 will have extra wage credits applied to their accounts when they retire and apply for social security benefits. The extra earnings credits will either contribute to the veteran having enough years of credit to qualify for social security retirement benefits or will augment the wage credits a veteran already qualified for benefits has on his account. Veterans who serve a full military career and qualify for retirement benefits are allowed to also receive full social security retirement benefits.
Recent Years
Starting in 1988, reservists and National Guard members began paying social security taxes on wages earned during inactive duty such as weekend drills. Veterans serving from 1968 through 2001 also had extra earnings credits applied to their social security accounts, and these credits have already been applied to the veteran's accounts. For active service from 1957 through 1977, the extra wage credit is $300 for every quarter of active duty wages. For the period of 1978 through 2001, the extra wage credit is $100 for every $300 in active duty wages up to $1,200. The extra wage credits are no longer applied for service after 2001. Veterans who enlisted for active service after September 7, 1980, and failed to fulfill a minimum of 24 months of active service or their complete tour are not eligible to receive the extra wage credits.