Tax Topic 751

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Tax Topic 751

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Topic 751 – Social Security and Medicare Withholding Rates
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.

Social Security and Medicare Withholding Rates
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.

Additional Medicare Tax Withholding Rate
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 Questions and Answers for the Additional Medicare Tax.

Wage Base Limits
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 2017, this base is $127,200. 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.

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