# 26 U.S.C. § 3111: Rate of tax Source: OLRC release point 119-134 . Cite pinpoints as 26 U.S.C. § 3111(a)(1). ## § 3111(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)). ## § 3111(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)). ## § 3111(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. ## § 3111(d) Repealed. Pub. L. 115–141, div. U, title IV, § 401(b)(34), Mar. 23, 2018, 132 Stat. 1204] ## § 3111(e) Credit for employment of qualified veterans **§ 3111(e)(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. **§ 3111(e)(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. **§ 3111(e)(3) Modifications.** For purposes of paragraph (1), section 51 shall be applied— **§ 3111(e)(3)(A)** by substituting “26 percent” for “40 percent” in subsection (a) thereof, **§ 3111(e)(3)(B)** by substituting “16.25 percent” for “25 percent” in subsection (i)(3)(A) thereof, and **§ 3111(e)(3)(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. **§ 3111(e)(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. **§ 3111(e)(5) Definitions.** For purposes of this subsection— **§ 3111(e)(5)(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 **§ 3111(e)(5)(B)** the term “qualified veteran” has the meaning given such term by section 51(d)(3). ## § 3111(f) Credit for research expenditures of qualified small businesses **§ 3111(f)(1) In general.** In the case of a taxpayer who has made an election under section 41(h) for a taxable year— **§ 3111(f)(1)(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 **§ 3111(f)(1)(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). **§ 3111(f)(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. **§ 3111(f)(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. **§ 3111(f)(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). ## Regulations - [Treas. Reg. § 31.3111-1](/26/reg/31.3111-1.md): Measure of employer tax. (interprets § 3111) - [Treas. Reg. § 31.3111-2](/26/reg/31.3111-2.md): Rates and computation of employer tax. (interprets § 3111) - [Treas. Reg. § 31.3111-3](/26/reg/31.3111-3.md): When employer tax attaches. (interprets § 3111) - [Treas. Reg. § 31.3111-4](/26/reg/31.3111-4.md): Liability for employer tax. (interprets § 3111) - [Treas. Reg. § 31.3111-5](/26/reg/31.3111-5.md): Manner and time of payment of employer tax. (interprets § 3111) - [Treas. Reg. § 31.3111-6](/26/reg/31.3111-6.md): Recapture of credits under the Families First Coronavirus Response Act and the Coronavirus Aid, Relief, and Economic Security Act. (interprets § 3111) ## Final rules - [88 FR 48118](https://www.federalregister.gov/documents/2023/07/26/2023-15690/recapture-of-certain-excess-employment-tax-credits-under-covid-19-legislation) (2023): Recapture of Certain Excess Employment Tax Credits Under COVID-19 Legislation ## Leading cases - [United States v. Cleveland Indians Baseball Co., 532 U.S. 200 (2001)](https://www.courtlistener.com/opinion/118419/united-states-v-cleveland-indians-baseball-co/) - [The Bubble Room, Inc. v. United States, 159 F.3d 553 (Fed. Cir. 1999)](https://www.courtlistener.com/opinion/758790/the-bubble-room-inc-v-united-states/) - [Zhang v. United States, 640 F.3d 1358 (Fed. Cir. 2011)](https://www.courtlistener.com/opinion/214076/xianli-zhang-v-united-states/) ## Proposed regulations (not in force) - [Prop. Treas. Reg. § 31.3111-6](/26/prop/31.3111-6_2024-14167.md): Recapture of credits under the Families First Coronavirus Response Act and the Coronavirus Aid, Relief, and Economic Security Act. (REG-109032-23, proposed 2024-07-02) ## Connections Cites: § 38 General business credit; § 41 Credit for increasing research activities; § 51 Amount of credit; § 501 Exemption from tax on corporations, certain trusts, etc.; § 3121 Definitions Cited by: § 41 Credit for increasing research activities; § 45B Credit for portion of employer social security taxes paid with respect to employee cash tips; § 45R Employee health insurance expenses of small employers; § 51 Amount of credit; § 52 Special rules; § 401 Qualified pension, profit-sharing, and stock bonus plans; § 3112 Instrumentalities of the United States; § 3121 Definitions; § 3122 Federal service; § 3125 Returns in the case of governmental employees in States, Guam, American Samoa, and the District of Columbia; § 3126 Return and payment by governmental em­ployer; § 3127 Exemption for employers and their employees where both are members of religious faiths opposed to participation in Social Security Act programs; § 3131 Credit for paid sick leave; § 3132 Payroll credit for paid family leave; § 3133 Special rule related to tax on employers; § 3134 Employee retention credit for employers subject to closure due to COVID–19; § 3211 Rate of tax; § 3221 Rate of tax; § 6432 Continuation coverage premium assistance; § 6674 Fraudulent statement or failure to furnish statement to employee; § 6690 Fraudulent statement or failure to furnish statement to plan participant Derived from: 1939 § 1410 ## Amendments - 1954-08-16: [Act Aug. 16, 1954, ch. 736](/26/act/1954-ch736.md), 68A Stat. 416 - 1954-09-01: [Act Sept. 1, 1954, ch. 1206](/26/act/1954-ch1206.md), 68 Stat. 1094 - 1956-08-01: [Act Aug. 1, 1956, ch. 836](/26/act/1956-ch836.md), 70 Stat. 845 - 1958-08-28: [Pub. L. 85-840](/26/act/85-840.md), 72 Stat. 1042 - 1961-06-30: [Pub. L. 87-64](/26/act/87-64.md), 75 Stat. 141 - 1965-07-30: [Pub. L. 89-97](/26/act/89-97.md), 79 Stat. 343 - 1968-01-02: [Pub. L. 90-248](/26/act/90-248.md), 81 Stat. 836 - 1971-03-17: [Pub. L. 92-5](/26/act/92-5.md), 85 Stat. 11 - 1972-07-01: [Pub. L. 92-336](/26/act/92-336.md), 86 Stat. 421 - 1972-10-30: [Pub. L. 92-603](/26/act/92-603.md), 86 Stat. 1363 - 1973-12-31: [Pub. L. 93-233](/26/act/93-233.md), 87 Stat. 954 - 1976-10-04: [Pub. L. 94-455](/26/act/94-455.md), 90 Stat. 1806 - 1977-12-20: [Pub. L. 95-216](/26/act/95-216.md), 91 Stat. 1511 - 1983-04-20: [Pub. L. 98-21](/26/act/98-21.md), 97 Stat. 88 - 1987-12-22: [Pub. L. 100-203](/26/act/100-203.md), 101 Stat. 1330 - 1988-11-10: [Pub. L. 100-647](/26/act/100-647.md), 102 Stat. 3793 - 2004-03-02: [Pub. L. 108-203](/26/act/108-203.md), 118 Stat. 530 - 2010-03-18: [Pub. L. 111-147](/26/act/111-147.md), 124 Stat. 72 - 2011-11-21: [Pub. L. 112-56](/26/act/112-56.md), 125 Stat. 730 - 2014-12-19: [Pub. L. 113-295](/26/act/113-295.md), 128 Stat. 4051 - 2015-12-18: [Pub. L. 114-113](/26/act/114-113.md), 129 Stat. 3051 - 2018-03-23: [Pub. L. 115-141](/26/act/115-141.md), 132 Stat. 1194 - 2022-08-16: [Pub. L. 117-169](/26/act/117-169.md), 136 Stat. 2013