2013 Social Security and Medicare Tax, "Payroll Tax Holiday" Expires December 31, 2012
January 4, 2013
The Social Security wage base (the amount of an employee's taxable earnings that can be taxed for Social Security purposes) has risen from $110,100 in 2012 to $113,700 in 2013. This means that the first $113,700 of an employee's taxable earnings is taxable for Social Security purposes.
The employee Social Security tax rate for 2013 is 6.2% of covered earnings up to $113,700. In 2011 and 2012, federal legislation temporarily lowered the Social Security tax rate for an employee from 6.2% to 4.2% (employers continued to pay 6.2% of earnings).
The lower 4.2% employee Social Security tax rate referred to as a "Payroll Tax Holiday" expired on December 31, 2012. As a result, employees will be taxed at the full 6.2% tax rate beginning with paychecks paid in 2013. Unclassified employees (paid monthly) will see the tax rate increase starting with the January 2, 2013 paycheck. Classified employees (paid bi-weekly) will see the increase starting with the check paid January 10, 2013. The employee Social Security tax deduction is reflected on earnings statements as Fed OASDI/EE.
The employee Medicare tax rate employers are required to withhold for 2013 is 1.45% of an employee's taxable earnings up to $200,000 and 2.35% (a 0.9% increase from the 2012 1.45% tax rate) of taxable earnings in excess of $200,000. The additional 0.9% begins when taxable wages reach $200,000. The employer will continue to contribute 1.45% of total covered earnings to Medicare. Employees whose combined household earnings for tax reporting purposes is between $200,000 and $250,000 may receive a credit of the 0.9% increase upon filing their 2013 tax return.