Social Security and Medicare Wage Bases and Tax Rates for 2012
December 14, 2011
The Social Security wage base, the amount of an employee's salary that can be taxed for Social Security purposes, has risen from $106,800 in 2011 to $110,100 for 2012. This means that the first $110,100 of an employee's wages are taxable for Social Security purposes. An employee's entire salary is taxable for Medicare purposes.
The 2012 employee and employer tax rates for Social Security (full FICA) will be 7.65% (6.20% Social Security plus 1.45% Medicare) for wages up to $110,100. All wages over $110,100 are subject only to the 1.45% Medicare rate. The rate remains at 1.45% for those who are subject only to Medicare.
Please note that federal legislation reduced by 2% the portion of Social Security payroll tax paid by the employee for wages and salaries paid in calendar year 2011. The 2% tax reduction is set to expire on December 31, 2011 resulting in an increase for 2012 back to the 6.2% tax rate. There are several pending pieces of federal legislation that may decrease the Social Security tax rate in 2012. An updated news item will be posted on the portal if legislation is passed in regard to the Social Security tax rate.
Source: UW System Administration
Categories: Tax