Social Security taxes definition
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 2020 the Social Security portion of FICA (excluding Medicare) to be withheld from the first $137,700 of each employee’s annual salary or wages is 6.2%. In addition, the employer incurs Social Security expense of 6.2% and as a result must remit 12.4% of the first $137,700 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 plus there is a Medicare surtax, which you can learn about on IRS.gov.) To learn more, see Explanation of Payroll Accounting.