Taxes under the Federal Insurance Contributions Act (FICA) are composed of the old-age, survivors, and disability insurance taxes, also known as social security taxes, and the hospital insurance tax, also known as Medicare taxes. Different rates apply for these taxes. The current tax rate for social security is 6.2% for the employer and 6.2% for the employee, or 12.4% total.
The current rate for Medicare is 1.45% for the employer and 1.45% for the employee, or 2.9% total. Refer to Publication 15, (Circular E), Employer's Tax Guide for more information; or
Publication 51, (Circular A), Agricultural Employer’s Tax Guide for agricultural employers. Refer to
Notice 2020-65PDF and
Notice 2021-11PDF for information allowing employers to defer withholding and payment of the employee's share of Social Security taxes of certain employees. Additional Medicare Tax applies to an individual's Medicare wages that exceed a threshold amount based on the taxpayer's filing status. Employers are responsible for withholding the 0.9% Additional Medicare Tax on an individual's wages paid in excess of $200,000 in a calendar year, without regard to filing status. An employer is required to begin withholding Additional Medicare Tax in the pay period in which it pays wages in excess of $200,000 to an employee and continue
to withhold it each pay period until the end of the calendar year. There's no employer match for Additional Medicare Tax. For more information, see the Instructions for Form 8959 and Questions and Answers for the Additional Medicare Tax. Only the social security tax has a wage base limit. The wage base limit is the maximum wage
that's subject to the tax for that year. For earnings in 2022, this base is $147,000. Refer to "What's New" in Publication 15 for the current wage limit for social security wages; or
Publication 51 for agricultural employers. There's no wage base limit for Medicare tax. All covered wages are subject to Medicare tax. Paying Social Security tax is a time-honored tradition—since 1937, to be exact. Both employers and employees pay the tax. But when an employee hits the Social Security wage base, it’s game over for withholding and contributing the tax. Although the Social Security tax rate generally does not change from year to year, the Social Security taxable wage base does. Read on to learn more about Social Security tax. Learn what the withholding rate is, what the wages fund, and—of course—the wage base. Your 1-minute overview of Social Security taxSocial Security tax is an employment tax employers withhold from employee wages and contribute a matching portion. Both Social Security and Medicare taxes make up the payroll tax known as FICA. Here’s a quick recap of employment taxes and who pays what:
The Social Security Act, which is the law that started the program, was signed into law in 1935. Social Security is a social insurance program. The Social Security Administration is the federal agency that administers the program. Social Security tax rateThe Social Security tax withholding rate is 6.2%. You must withhold 6.2% from each employee’s wages. The Social Security employer contribution is also 6.2%. Let’s say an employee receives $1,000 each paycheck. You must withhold $62 ($1,000 X 0.062) from their wages and pay an additional $62 for Social Security tax. Again, both Social Security and Medicare make up FICA tax. Medicare tax is 1.45%. So, FICA tax is 7.65% for the employee portion and 7.65% for the employer portion (6.2% + 1.45%). What do Social Security wages fund?Social Security tax funds a number of things, including benefits for:
According to the Social Security Administration, retired workers receive an average monthly Social Security benefit of $1,514. Disabled workers receive an average monthly benefit of $1,259. Social Security taxes also go towards paying for the administration of the program. After paying out benefits and administration costs, there is a surplus. The federal government borrows remaining money from the Social Security fund. The government is responsible for paying interest on the borrowed funds. Now, onto the good stuff. The Social Security withholding limit. Only withhold and contribute Social Security taxes until an employee earns above the wage base. Stay up-to-date with the annual Social Security wage base because it generally changes each year. The 2022 Social Security wage base is $147,000.  After an employee earns above the annual wage base, do not withhold money for Social Security taxes. And, don’t contribute anything else. Not all employees will earn above the withholding limit. If an employee does not meet this wage base, continue withholding and contributing year-round. The maximum Social Security contribution in 2022 is $9,114 ($147,000 X 0.062). If you withhold more than $9,114 (2022), you surpassed the wage base and must reimburse your employee. Remember that the amount you withhold for each employee is based on how much they earn. Patriot’s Payroll takes the stress out of payroll taxes
Do other taxes have a wage base?Social Security tax is the only federal tax employees pay with a wage base. Although Medicare also makes up FICA tax, it does not have a wage base. Instead, it has an additional tax once an employee earns a certain amount. Keep in mind that some state taxes, like SUTA tax, and federal unemployment tax also have a wage base. Social Security wage base historyDo you enjoy history? Take a look at this list of Social Security wage bases since 2000:
This article has been updated from its original publication date of 05/07/2015. This is not intended as legal advice; for more information, please click here. What is the max Social Security tax for 2023?6.2% Social Security tax on the first $160,200 of employee wages (maximum tax is $9,932.40; i.e., 6.20% × $160,200), plus; 1.45% Medicare tax on the first $200,000 of employee wages, plus; 2.35% Medicare tax (regular 1.45% Medicare tax + 0.9% additional Medicare tax) on all employee wages in excess of $200,000.
Is there a cap on Social Security tax?The Social Security tax rate for those who are self-employed is the full 12.4%. There is a limit on the amount of annual wages or earned income subject to taxation, called a tax cap; in 2021, the maximum amount of income subject to the Social Security tax is $142,800; in 2022, the maximum is $147,000.
What is the max contribution for Social Security?The Social Security tax limit is the maximum amount of earnings subject to Social Security tax. The Social Security taxable maximum is $142,800 in 2021. Workers pay a 6.2% Social Security tax on their earnings until they reach $142,800 in earnings for the year.
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What is the maximum social security contribution for 2022
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