A taxpayer who claims exempt on a W-4 form turned into an employer has Social Security and Medicare taxes taken out of a regular paycheck, according to the Internal Revenue Service. As of 2014, the Social Security tax rate is 6.2 percent and Medicare tax rate is 1.45 percent.
An employee who claims exempt on income tax withholding has 7.65 percent of his income withheld for tax purposes, but none of the federal income taxes a person normally pays, explains the IRS. For a $500 paycheck, $38.25 is taken out by the employer to pay Social Security and Medicare taxes. The highest withholding rate for a paycheck is for a taxpayer who is single with no allowances for dependents.
A W-4 form is filled out when a taxpayer first works for a company. The withheld amount may change based on an employee's status, and the withheld amount may change even if the employee still works for the same company. Circumstances that may change withheld amounts include divorce and an event that changes the number of allowances, states the IRS. Each allowance reduces the amount of income tax withheld on each check. Taxpayers may change their withholding amount at any time, and the withheld amount is taken into account when taxpayers file annual income tax returns.