Social Security Act of 1935

This groundbreaking Act established Old Age and Survivor’s Insurance, which was funded by compulsory savings by wage earners. The savings were to be paid back to the wage earners upon their retirement at age 65. The initial payments were 1% of gross wages by both the employee and employer, gradually ramping up to 3% by 1948. Employers were held responsible for withholding this tax from employee pay. The Act also created the Federal Unemployment Trust Fund through additional withholding, which could be reduced by up to 90% if an employee also contributed to a state unemployment fund.

Originally, only employees engaged in commercial or industrial occupations were covered by this Act, though numerous later changes to the Act have greatly expanded its coverage.

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