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Internal Revenue Code · 26 U.S.C.

§ 3111. Rate of tax

In force Text current through Public Law 119-121 (October 9, 2026) release point 119-121

Official text, no changes From the Office of the Law Revision Counsel, release point 119-121 (current through Public Law 119-121 (October 9, 2026)). Compare it with the official text at uscode.house.gov (external site).

Cite as 26 U.S.C. § 3111

At a glance

Read from the text, the source credit and the official notes. Not part of the law.

Status
In force
Enacted
August 28, 1958 by Pub. L. 85–840
Last amended
August 16, 2022 by Pub. L. 117–169
Amendments
19 dated changes in the source credit
Length
6 subsections · 1,164 words · about 5 min to read
Defines
3 terms
Cross-references
cites 6; cited by 22 Code sections and 30 other regulations
Regulations
6 issued under this section
(a) Old-age, survivors, and disability insurance

In addition to other taxes, there is hereby imposed on every employer an excise tax, with respect to having individuals in his employ, equal to 6.2 percent of the wages (as defined in section 3121(a)) paid by the employer with respect to employment (as defined in section 3121(b)).

(b) Hospital insurance

In addition to the tax imposed by the preceding subsection, there is hereby imposed on every employer an excise tax, with respect to having individuals in his employ, equal to 1.45 percent of the wages (as defined in section 3121(a)) paid by the employer with respect to employment (as defined in section 3121(b)).

(c) Relief from taxes in cases covered by certain international agreements

During any period in which there is in effect an agreement entered into pursuant to section 233 of the Social Security Act with any foreign country, wages received by or paid to an individual shall be exempt from the taxes imposed by this section to the extent that such wages are subject under such agreement exclusively to the laws applicable to the social security system of such foreign country.

[(d) Repealed. Pub. L. 115–141, div. U, title IV, § 401(b)(34), Mar. 23, 2018, 132 Stat. 1204]
(e) Credit for employment of qualified veterans
(1) In general

If a qualified tax-exempt organization hires a qualified veteran with respect to whom a credit would be allowable under section 38 by reason of section 51 if the organization were not a qualified tax-exempt organization, then there shall be allowed as a credit against the tax imposed by subsection (a) on wages paid with respect to employment of all employees of the organization during the applicable period an amount equal to the credit determined under section 51 (after application of the modifications under paragraph (3)) with respect to wages paid to such qualified veteran during such period.

(2) Overall limitation

The aggregate amount allowed as a credit under this subsection for all qualified veterans for any period with respect to which tax is imposed under subsection (a) shall not exceed the amount of the tax imposed by subsection (a) on wages paid with respect to employment of all employees of the organization during such period.

(3) Modifications For purposes of paragraph (1), section 51 shall be applied—
(A) by substituting “26 percent” for “40 percent” in subsection (a) thereof,
(B) by substituting “16.25 percent” for “25 percent” in subsection (i)(3)(A) thereof, and
(C) by only taking into account wages paid to a qualified veteran for services in furtherance of the activities related to the purpose or function constituting the basis of the organization’s exemption under section 501.
(4) Applicable period

The term “applicable period” means, with respect to any qualified veteran, the 1-year period beginning with the day such qualified veteran begins work for the organization.

(5) Definitions For purposes of this subsection—
(A) the term “qualified tax-exempt organization” means an employer that is an organization described in section 501(c) and exempt from taxation under section 501(a), and
(B) the term “qualified veteran” has the meaning given such term by section 51(d)(3).
(f) Credit for research expenditures of qualified small businesses
(1) In general In the case of a taxpayer who has made an election under section 41(h) for a taxable year—
(A) there shall be allowed as a credit against the tax imposed by subsection (a) for the first calendar quarter which begins after the date on which the taxpayer files the return specified in section 41(h)(4)(A)(ii) an amount equal to so much of the payroll tax credit portion determined under section 41(h)(2) as does not exceed the limitation of subclause (I) of section 41(h)(4)(B)(i) (applied without regard to subclause (II) thereof), and
(B) there shall be allowed as a credit against the tax imposed by subsection (b) for the first calendar quarter which begins after the date on which the taxpayer files the return specified in section 41(h)(4)(A)(ii) an amount equal to so much of the payroll tax credit portion determined under section 41(h)(2) as is not allowed as a credit under subparagraph (A).
(2) Limitation

The credit allowed by paragraph (1)(A) shall not exceed the tax imposed by subsection (a) for any calendar quarter, and the credit allowed by paragraph (1)(B) shall not exceed the tax imposed by subsection (b) for any calendar quarter, on the wages paid with respect to the employment of all individuals in the employ of the employer.

(3) Carryover of unused credit

If the amount of any credit under paragraph (1) exceeds the limitation of paragraph (2) for any calendar quarter, such excess shall be carried to the succeeding calendar quarter and allowed as a credit under paragraph (1) for such quarter.

(4) Deduction allowed for credited amounts

The credits allowed under paragraph (1) shall not be taken into account for purposes of determining the amount of any deduction allowed under chapter 1 for taxes imposed under subsection (a) or (b).

(Aug. 16, 1954, ch. 736, 68A Stat. 416; Sept. 1, 1954, ch. 1206, title II, § 208(c), 68 Stat. 1094; Aug. 1, 1956. ch. 836, title II, § 202(c), 70 Stat. 845; Pub. L. 85–840, title IV, § 401(c), Aug. 28, 1958, 72 Stat. 1042; Pub. L. 87–64, title II, § 201(c), June 30, 1961, 75 Stat. 141; Pub. L. 89–97, title I, § 111(c)(6), title III, § 321(c), July 30, 1965, 79 Stat. 343, 396; Pub. L. 90–248, title I, § 109(a)(3), (b)(3), Jan. 2, 1968, 81 Stat. 836, 837; Pub. L. 92–5, title II, § 204(a)(2), Mar. 17, 1971, 85 Stat. 11; Pub. L. 92–336, title II, § 204(a)(3), (b)(3), July 1, 1972, 86 Stat. 421, 422; Pub. L. 92–603, title I, § 135(a)(3), (b)(3), Oct. 30, 1972, 86 Stat. 1363, 1364; Pub. L. 93–233, § 6(a)(2), (b)(3), Dec. 31, 1973, 87 Stat. 954, 955; Pub. L. 94–455, title XIX, § 1903(a)(1), Oct. 4, 1976, 90 Stat. 1806; Pub. L. 95–216, title I, § 101(a)(2), (b)(2), title III, §§ 315(b), 317(b)(2), Dec. 20, 1977, 91 Stat. 1511, 1512, 1537, 1540; Pub. L. 98–21, title I, § 123(a)(2), Apr. 20, 1983, 97 Stat. 88; Pub. L. 100–203, title IX, § 9006(b)(1), Dec. 22, 1987, 101 Stat. 1330–289; Pub. L. 100–647, title VIII, § 8016(a)(5), Nov. 10, 1988, 102 Stat. 3793; Pub. L. 108–203, title IV, § 415, Mar. 2, 2004, 118 Stat. 530; Pub. L. 111–147, title I, § 101(a), Mar. 18, 2010, 124 Stat. 72; Pub. L. 112–56, title II, § 261(e)(2), Nov. 21, 2011, 125 Stat. 730; Pub. L. 113–295, div. A, title II, § 221(a)(99)(B), Dec. 19, 2014, 128 Stat. 4051; Pub. L. 114–113, div. Q, title I, § 121(c)(2), Dec. 18, 2015, 129 Stat. 3051; Pub. L. 115–141, div. U, title IV, § 401(a)(208), (b)(34), Mar. 23, 2018, 132 Stat. 1194, 1204; Pub. L. 117–169, title I, § 13902(b), Aug. 16, 2022, 136 Stat. 2013.)

Terms defined here

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Regulations under this section

Treasury regulations (26 CFR) issued under § 3111

From Carry Forward Learning, not part of the law

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Cross-references

Computed from the citations in the text of Title 26 and 26 CFR.

This section cites 6 other sections

Cited by 22 Code sections

Cited in 30 regulations not issued under it

Show 6 more

Amendment history

From the source credit and the official notes, newest first.

  1. Amended by Pub. L. 117–169Parts changed in 2022: (f)(1) (f)(2) (f)(3) (f)(4)
  2. Amended by Pub. L. 115–141Parts changed in 2018: (d) (e)(5)(B)
  3. Amended by Pub. L. 114–113Parts changed in 2015: (f)
  4. Amended by Pub. L. 113–295Parts changed in 2014: (a) (b)
  5. Amended by Pub. L. 112–56Parts changed in 2011: (e)
  6. Amended by Pub. L. 111–147Parts changed in 2010: (d)
  7. Amended by Pub. L. 108–203Parts changed in 2004: (c)
  8. Amended by Pub. L. 100–647Parts changed in 1988: (a)
  9. Amended by Pub. L. 100–203Parts changed in 1987: (a)
  10. Amended by Pub. L. 98–21Parts changed in 1983: (a)
  11. Amended by Pub. L. 95–216Parts changed in 1977: (a) (b) (c)
  12. Amended by Pub. L. 94–455Parts changed in 1976: (a) (b)
  13. Amended by Pub. L. 93–233Parts changed in 1973: (a)(4) (a)(5) (a)(6) (b)(2) (b)(3) (b)(4) (b)(5) (b)(6)
  14. Amended by Pub. L. 92–603Parts changed in 1972: (a)(3) (a)(4) (a)(5) (a)(6) (b)(2) (b)(3) (b)(4) (b)(5)
  15. Amended by Pub. L. 92–336
  16. Amended by Pub. L. 92–5Parts changed in 1971: (a)(4) (a)(5)
  17. Amended by Pub. L. 90–248Parts changed in 1968: (a)(1) (b)(1)
  18. Amended by Pub. L. 89–97Parts changed in 1965: (b)
  19. Amended by Pub. L. 87–64
  20. Enacted by Pub. L. 85–840

Where it sits in the Code

  1. Subtitle C Employment Taxes
  2. Chapter 21 FEDERAL INSURANCE CONTRIBUTIONS ACT
  3. Subchapter B Tax on Employers

Nearby sections

Official notes

The Law Revision Counsel's notes for this section (amendments, effective dates and related laws) are long, so they have their own page.