Social Security (FICA) tax for employees

The Social Security Administration (SSA) has announced that the Social Security taxable wage base will increase to $102,000 (up from $97,500 in 2007).  That means up to $4,500 more of an employee’s wages could be subject to the Social Security portion of the FICA tax for 2008.  The FICA tax rate will hold steady at 7.65% for 2008 (The Social Security portion of the FICA rate is 6.2%; the Medicare portion is 1.45%).

FICA Tax is composed of two portions:

1. OASDI (Old Age, Survivors, Disability Insurance) or better know as the Social Security Tax.
   • 2008 FICA taxable wages capped at $102,000 (up from $97,500 in 2007)
   • 2008 Social Security tax rate of 6.20% on wages up to $102,000 or a maximum of $6,324.00 Social Security taxes.
2. Medicare (Hospital Insurance)
   • Medicare tax applies to all FICA taxable wages. There is no cap for this tax.
   • 2008 Medicare tax computed as 1.45% of all FICA taxable wages (EX:  $1,479.00 for FICA taxable earnings of $102,000)

Therefore, for the first $102,000 in FICA taxable earnings employees will pay a combined tax amount of $7,803.00 ($6,324.00 + $1,479.00).  All FICA taxable earnings in excess of the $102,000 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.