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What is the federal Social Security tax?

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Quick Answer

The federal Social Security tax is paid by employees and employers at 6.2 percent of an employee's wages, according to the Social Security Administration. Wages up to $118,500 are taxed at this rate, as of 2015. Self-employed taxpayers contribute 12.4 percent of their income toward Social Security.

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Full Answer

Someone who makes $118,500 in the 2015 tax year pays $7,347 toward Social Security, and the person's employer contributes the same amount, notes the federal government. The taxes go toward the Social Security Old-Age, Survivors and Disability Insurance program. The annual limits paid into the program also determine someone's Social Security benefit later in life when a taxpayer retires.

The upper limit of $118,500 for contributions and benefits in 2015 rose from $117,000 the year before, says the Social Security Administration. Social Security taxes on wages began to be collected in 1937. The maximum contribution limit rose above $100,000 for the first time in 2008.

The Social Security tax, and the Medicare Hospital Insurance program tax, get withheld from someone's net income, according to the Society for Human Resource Management. These taxpayer contributions are known collectively as Federal Insurance Contributions Act taxes. The total FICA tax rate paid by most Americans in 2015 is 7.65 percent for employees and employers. Medicare taxes do not have contribution limits.

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