The Social Security Administration has announced that the wage base for computing the Social Security tax (OASDI) in 2015 will increase to $118,500 from $117,000, which was the wage base for 2014. The $1,500 increase, which is about 1.3%, is due to an increase in average total wages.
The Federal Insurance Contributions Act (FICA) imposes two taxes on employers, employees, and self-employed workers — one for Old Age, Survivors and Disability Insurance (OASDI; commonly known as the Social Security tax), and the other for Hospital Insurance (HI; commonly known as the Medicare tax).
For 2015, the FICA tax rate for employers is 7.65% each — 6.2% for OASDI and 1.45% for HI.
For 2015, an employee pays: (a) 6.2% Social Security tax on the first $118,500 of wages ((maximum tax is $7,347.00 [6.2% of $118,500)) (b) 1.45% Medicare tax on the first $200,000 of wages ($250,000 for joint returns; $125,000 for married taxpayers filing a separate return) (c) 2.35% Medicare tax (regular 1.45% Medicare tax + 0.9% additional Medicare tax) on all wages in excess of $200,000 ($250,000 for joint returns; $125,000 for married taxpayers filing a separate return)
For 2015, the self-employment tax imposed on self-employed people is: (a) 12.4% OASDI on the first $118,500 of self-employment income, for a maximum tax of $14,694.00 (12.40% of $118,500) (b) 2.90% Medicare tax on the first $200,000 of self-employment income ($250,000 of combined self-employment income on a joint return, $125,000 on a separate return) (c) 3.8% (2.90% regular Medicare tax + 0.9% additional Medicare tax) on all self-employment income in excess of $200,000 ($250,000 of combined self-employment income on a joint return, $125,000 for married taxpayers filing a separate return)
There is a maximum amount of compensation subject to the OASDI tax, but no maximum for HI.
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