What are these FICA Tax Rates Again?
Let’s review what exactly these numbers stand for. First of all, the FICA tax is actually two taxes rolled into one: Social Security tax and Medicare tax. The FICA tax is also called the payroll tax. It’s taxes that are used to take care of the elderly, and that includes you when you retire.
Who Pays the FICA tax?
The FICA tax is shared by employees and employers. If you are your own employer, then lucky you, both parts are your responsibility. Here’s how it’s broken down:
- 2012 (and maybe 2013) Social Security Tax rate: 4.2% (employee’s share)
- Social Security tax: 6.2% (employer’s share)
- Medicare tax rate: 1.45% (each half)
If Congress doesn’t extend the reduced Social Security tax rate for employees, that will go back up to 6.2%, matching the employer’s share once again.