Question

The tax base for Social Security and Medicare taxes is wages.

a. What is the 2019 total Social Security tax rate? Of this total rate, what is the rate paid by employees? What amount of wages is subject to this tax in 2019?

b. What is the 2019 total Medicare tax rate on wages paid by both employers and employees together? What amount of wages is subject to this tax in 2019? Starting in 2013, an additional Medicare Tax of 0.9% was imposed. Who pays this additional Medicare tax – the employer, the employee, or both?

Answer 1

Part A

2019 total Social Security tax rate is 12.4%.

Of the total social security tax rate, 6.2% is paid by the employees

The wages up to $132900 are subject to this tax in 2019. (the wage base has been increased from $128400 in 2018 to $132900 in 2019)

Part B

the 2019 total Medicare tax rate on wages paid by both employers and employees together is 2.9%. All earnings are subject to this tax in 2019. There is no wage limit to apply medicare tax rate. This additional Medicare tax is paid by the employee (The wage earner pays the additional 0.9% medicare tax rate in case the earnings exceed by $200000 in case of single taxpayer, $250000 for married taxpayers who file jointly, and $125000 for married taxpayers who file separately)