The Federal Insurance Contributions Act (FICA) tax rate \u2014 which is the combined total of the Social Security tax rate and the 1.45 percent Medicare tax rate \u2014 also remains unchanged at 7.65 percent. Employers are required to file payroll taxes quarterly according to the IRS Form 941. Self-employed persons are covered under a separate Act known as the SECA (the Self-Employed Contributions Act). They are required to pay both the employee and employer parts of the FICA tax.<\/p>\n
The program plays a vital role in ensuring access to healthcare for millions of Americans. There is no limit on earnings for workers who have reach or passed their full retirement age for the entire year. The SSA also announced upward adjustments in the Social Security earnings test limit. For those who collect Social Security retirement benefits before reaching their full retirement age, benefits are reduced by $1 for every $2 they earn over the earnings limit. When the tax provisioning portion of the Social Security Act – Title VIII – was removed from the program in 1939, it was placed into the Internal Revenue Tax code. At that time, a more descriptive name than Title VIII was needed, so the tax was renamed as the Federal Insurance Contributions Act, or simply FICA.<\/p>\n
The rate on that tax would be 7.4%, with a matching 7.4% obligation for employers. Such a move could increase FICA withholding for high-income individuals by an even greater amount than the Sanders proposal, and it would add a progressive element to the FICA tax structure for the first time. For example, if an employee\u2019s gross salary is $1000, then the comprehensive annual financial report<\/a> social security tax would be $1000 multiplied by 6.2% resulting in an amount of $62.<\/p>\n