The employee's portion of the Social Security tax, which is withheld from employees salary and wages during 2011, will be 4.2% of the first $106,800 of each employee's taxable earnings. (The employee withholding rate of 4.2% is two percentage points lower than the 2010 rate of 6.2%.) Each employee's earnings in excess of $106,800 are not subject to the Social Security tax.
The employer's portion of the Social Security tax in 2011 remains at 6.2% of each employee's first $106,800 of taxable earnings. There is no employer Social Security tax on any employee's earnings above $106,800 during 2011.
In addition to the Social Security tax, the employee must have withholdings for the Medicare tax of 1.45% of every dollar of salary or wages. The employer must also pay a Medicare tax of 1.45% on every dollar of every employee's salary or wages. Hence, the combined Medicare tax for 2011 remains at 2.9% on all employees' earnings.
Self-employed individuals are responsible for paying both the employee and the employer portions of the Social Security tax and the Medicare tax.
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