For the United States, the agreement applies to the Retirement, Survivors and Disability Insurance (RSDI) program's Federal Insurance Contributions Act (FICA) taxes for employment and Self Employment Contributions Act (SECA) taxes for self-employment, including the Medicare portion. If an employee is exempt from U.S. Social Security coverage under this agreement, neither the employee nor employer has to pay his or her share of the FICA tax as long as the exemption is effective. A self-employed individual is also exempt from paying SECA taxes (equivalent to the employee and employer share of the FICA tax) for any period the exemption is effective.

For Iceland, this Agreement applies to the laws governing its first pillar residence-based benefit system, as well as the second pillar mandatory occupational pension system. A worker subject only to U.S. laws under the coverage provisions of this Agreement and his or her employer will be exempt from making contributions for all mandatory Icelandic benefit and pension programs.