The Social Security tax rate (excluding the Medicare tax) for the year 2009 is 6.20% on the first $106,800 of an employee's taxable earnings. Taxable earnings includes items such as salaries, wages, and cash bonuses. Since the Social Security tax is withheld from employees and then matched by the employer, the total Social Security tax (excluding the Medicare tax) is 12.40% on the first $106,800 of each employee's earnings paid by the employer in the year 2009.
The Medicare tax remains at 1.45% of every dollar of every employee's salaries, wages, etc. The Medicare tax is also matched by the employer resulting in the employer remitting 2.90% of every dollar of wages, salaries, etc. paid to employees in the year 2009.
The combination of the Social Security tax and the Medicare tax is often referred to as FICA. Combining the information above, the FICA rate for 2009 is 7.65% withheld from the first $106,800 of each employee's earnings and 1.45% on any employee's earnings above $106,800. Since the employer matches these amounts, the employer must remit 15.3% of each employee's first $106,800 of earnings plus 2.90% of any employee's 2009 earnings that are greater than $106,800.
Self-employed individuals are responsible for both the employee and employer portions of Social Security and Medicare taxes.
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