Social Security taxes

One component of the payroll tax referred to as FICA. (The other component of the FICA tax is the Medicare tax.) The Social Security tax is levied by the U.S. government on both the employee and the employer. In 2009 the Social Security portion of FICA (excluding Medicare) to be withheld from the first $106,800 of each employee's annual salary or wages is 6.2%. The employer is required to match that withholding and thus remit 14.4% of the first $106,800 of each employee's salary or wages. (Medicare taxes are an additional 1.45% for both the employee and the employer on every dollar of salary and wages—for a FICA rate of 7.65% on the first $106,800 of each employee's annual salary and wages and 6.2% on amounts in excess of $106,800.) In 2010 the Social Security portion of FICA will also apply to the first $106,800 of annual Salary or Wages. To learn more, see Explanation of Payroll Accounting.