The Social Security Administration (SSA) has announced that the Social Security taxable wage base will remain at $106,800. The FICA tax rate will hold steady at 7.65% for 2010. (The Social Security portion of the FICA rate is 6.2%; the Medicare portion is 1.45%.)
FICA tax is composed of two portions:
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OASDI (Old Age, Survivors, Disability Insurance) or better known as the Social Security tax. The 2010 FICA taxable wages are capped at $106,800. The maximum amount of Social Security taxes to be paid in 2010 will be $6,621.60 based upon this $106,800 cap.
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Medicare (Hospital Insurance). Medicare tax applies to all FICA taxable wages. There is no cap for this tax. The 2010 Medicare tax is computed as 1.45% of all FICA taxable wages. For example, for FICA taxable earnings of $106,800, the Medicare tax would be $1,548.60.
Therefore, for the first $106,800 in FICA taxable earnings, employees will pay a combined tax amount of $8,170.20 ($6,621.60 + $1,548.60). All FICA taxable earnings in excess of $106,800 will continue to be taxed at the rate of 1.45% for Medicare. Your employer, the State of Maryland, continues to match all of your social security tax contributions. |
