Christopher Liew is a CFA Charterholder and former financial advisor. Federal Income Tax Calculator (2022-2023) - SmartAsset The answer is that, under SECA (the Self-Employed Contributions Act) you pay boththe employee and the employer tax, which means that youre paying 12.4% for Social Security Tax and 2.9% for Medicare Tax. Yes, 123PayStubs calculates your employee taxes including Medicare taxes accurately based on the employee's wages. You Can preview 2022drug Plans and Medicare Advantage Plans. FICA Tax Guide (2022): Payroll Tax Rates & Definition - SmartAsset Page Last Reviewed or Updated: 30-Jan-2023, Request for Taxpayer Identification Number (TIN) and Certification, Employers engaged in a trade or business who pay compensation, Electronic Federal Tax Payment System (EFTPS), Publication 15, (Circular E), Employer's Tax Guide, Publication 51, (Circular A), Agricultural Employers Tax Guide, Questions and Answers for the Additional Medicare Tax, Treasury Inspector General for Tax Administration, Topic No. $130,200, and $135,000 were applicable in 1991-93, respectively. However, only employees are responsible for paying the Additional Medicare Tax. Employees at U.S. businesses are required to pay what are known as FICA taxes, often referred to as payroll taxes. on Social Security Wage Base Updates for 2023, Sage Intacct 2023 Release 1: Improves AP Automation, Vendor Payments, and More, Developing an Effective Internal Audit Function. Please try again later. This information may be different than what you see when you visit a financial institution, service provider or specific products site. Both SECA and FICA tax rates have increased since they were introduced. What is FICA Tax? - The TurboTax Blog Heres how to determine your FICA taxes. Self-employed individuals pay a combined employer and employee amount towards social security taxes, which is at 15.3% up to $147,000 on their net earnings. to as the taxable maximum. As an employer, you are required to withhold 6.2% of each employee's taxable gross wages to cover this tax, up to a maximum wage base limit.Employers also have to pay this tax by matching each employee's contribution dollar-for-dollar, up to the same maximum wage base limit. Federal income tax rates dont kick in until after the individual has earned more than the basic personal amount. Only the employer contributes to this program. Email Please see our. But remember that the employer would match the tax contributions for both. Typically, you become exempt from withholding only if two things are true: You got a refund of all your federal income tax withheld last year because you had no tax liability. SUTA tax: The same general idea as FUTA, but the money funds a state program. To avoid the estimated tax penalty, you must pay one of the above percentages through a combination of estimated tax payments and withholding. The Federal Unemployment Tax Act (FUTA) is used to fund the federal unemployment program that benefits people who lose their job. To determine the amount of Medicare tax that should be withheld from an employees paycheck, you can multiply their gross pay (before any deductions) by the Medicare tax rate of 1.45%. 8% (2.90% regular Medicare tax plus 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). 751 Social Security and Medicare Withholding Rates. When evaluating offers, please review the financial institutions Terms and Conditions. For 2022, they will pay a 15.3% OASDI tax (the old age, survivors, and disability insurance tax) on the first $137,700 of self-employment income. Here is a list of our partners. Create pay stubs with accurate tax calculations with 123PayStubs. The COLA for recipients is 5.9% for 2022, which is the highest adjustment since 1982. The Social Security portion of FICA is sometimes labeled as OSADI, which is short for old-age, survivors, and disability insurance tax. Here are the tax brackets for 2023, as outlined by the CRA: Any Canadians earning less than $53,359 in taxable income per year (but above the basic personal amount of $15,000) will be subject to the base 15% tax rate. Social security and Medicare taxes apply to . While tax brackets arent that important during salary negotiations, inflation should definitely be mentioned. Before you test the FICA tax calculator on this page, you should understand what is a FICA tax ?. For 2023, you accumulate one credit for every $1,640 in covered earnings. is an income tax that a payer (typically an employer) remits on a payee's behalf (typically an employee). Because you may not be receiving a traditional paycheck, you may need to file estimated quarterly taxes in lieu of withholdings. In 2022, Canadians experienced high inflation levels as shifts in the global economy began to settle. All covered wages are subject to Medicare tax. Disclaimer: NerdWallet strives to keep its information accurate and up to date. The vast majority of people in the US who earn a wage or salary pay FICA taxes. She has also edited books on water policy, healthy living and architecture. The responsibility of paying FICA taxes is shared by workers and the people they work for. FICA may not sound like a whole lot of fun, but since its going to be part of your life every couple of weeks, now is a great time to read all about it. All financial products, shopping products and services are presented without warranty. We can help you create a tax strategy to ensure compliance. In that case, the FICA tax computation may be slightly different. The Additional Medicare Tax rate is0.9%for every dollar earned above the threshold amount. If the net result is negative, consider it zero. FICA tax includes two taxes: Medicare tax and Social Security tax. In 2022, the Social Security tax rate is 6.2% for employers and employees, unchanged from 2021. 2023 Social Security tax updates For 2023, an employee will pay: 2% Social Security tax on the first $162,200 of wages (6.2% of $160,200 makes the maximum tax $9,932), plus Your employer will withhold both taxes from your earnings. The rate for self-employment income is 12.4% in 2022. The process of wage base limit is a little different for the self-employed as they act as both employee and employer. to the OASDI program in 2023, and his or her employer would contribute the same The vast majority of people working in the US including the self-employed have to pay FICA taxes. The first part is 6.2%of employees taxable gross wages is the Social Security tax part. The same general idea as FUTA, but the money funds a state program. Because of the rapidly changing nature of the law and our reliance upon outside sources, we make no warranty or guarantee of the accuracy or reliability of information contained herein. Sheri Gordon is an assistant assigning editor on the Core Personal Finance team at NerdWallet and has edited financial content for more than 20 years. Thats because the IRS imposes a 12.4% Social Security tax and a 2.9% Medicare tax on net earnings. Self-Employment Contributions Act (SECA) taxes for self-employed? With 123PayStubs, you can create professional pay stubs for your employees with accurate tax calculations including FICA taxes at the lowest price ($3.99) in the industry. The recent upturn in cryptocurrencies has inspired many to reconsider investing. You fill outIRS Form 941, sign it, and hit send. Employers pay it. An official website of the United States Government. NerdWallet strives to keep its information accurate and up to date. The current tax rate for social security is 6.2% for the employer and 6.2% for the employee, or 12.4% total. $160,200. Form 8959 informs IRS about the amount of Additional Medicare Tax you owe and if any amount of Additional Medicare Tax is withheld by the employer for you. Once that threshold is reached, FICA is no longer withheld from a paycheck. So how do we make money? Can the employee ask you to stop withholding Social Security tax once he or she reaches the wage base threshold? The payment due date is one month after the end of each quarter. Our experts answer readers' tax questions and write unbiased product reviews (here's how we assess tax products). as well as other partner offers and accept our. Offer is valid for a limited time on federal tax returns, e-filed by 4/18/23, at 11:59 p.m. EDT. The OASDI tax rate for self-employment income in 2023 is 12.4 percent. a given year. There is no employer match for the additional Medicare tax. Our partners cannot pay us to guarantee favorable reviews of their products or services. Employees do not pay this tax or have it withheld from their pay. IRS Announces 2022 Tax Rates, Standard Deduction Amounts And More - Forbes So Employer deducts the FICA tax of 7.65%. 2022 Wage Cap Jumps to $147,000 for Social Security Payroll Taxes - SHRM which means they elect not to have federal income tax withheld from their paychecks. The rates shown reflect the amounts received by the trust funds. The current rate for Medicare is 1.45% for the employer and 1.45% for the employee, or 2.9% total. Here is what you need to know about FICA taxes and how they affect your paycheck. Sabrina Parys is a content management specialist at NerdWallet. The hospital insurance part is often noted as a Medicare tax. Social Security's Old-Age, Survivors, and Disability The same annual limit also applies when those earnings are used (FICA) Payroll Tax. Federal: $19.95 to $49.95 Free version available for simple tax returns only. It's the law that requires employers to withhold money from employees' paychecks to fund Social Security and Medicare. Lei Han, Ph.D., is an associate professor of accounting at Niagara University in Western New York and a New York state-licensed CPA. Each employer must withhold Social Security taxes from the individuals wages, even if the combined withholding exceeds the maximum amount that can be imposed for the year. Theres a lot to keep track which is why we developed a glossary with common payroll terms youre sure to come across as a small business owner. So the total Medicare tax rate is 2.9%.The calculation of Medicare withholding is relatively simple. What happens if youre self-employed? Employers deduct a certain amount from employee paychecks to pay federal income tax, Social Security tax, Medicare tax, and state income tax if any. The IRS, under the Affordable Care Act, introduced an Additional Medicare Tax in 2013. (only the first $147,000 in 2022; $160,200 in 2023). Your FICA taxes would be $11,289: Remember, youre required to pay Social Security taxes only on earnings up to $147,000. Before becoming an editor, she was NerdWallet's authority on taxes and small business. Topic No. 110% of prior year taxes. Social Security Tax. All Rights Reserved. She has written several nonfiction young adult books on topics such as mental health and social justice. 2022 updates For 2022, an employee will pay: 6.2% Social Security tax on the first $147,000 of wages (6.2% of $147,000 makes the maximum tax $9,114), plus In other words, a self-employed person has to pay 12.4% for Social Security Tax and 2.9% for Medicare Tax. The maximum Social Security tax per worker will be $18,228or a maximum $9,114 withheld from a highly paid employee's 2022 paycheck. She obtained her Ph.D. in accounting with a minor in finance from the University of Texas at Arlington. This wage base limit will change every year. She is based in Brooklyn, New York. They are mandatory for most employees, employers, and self-employed individuals. in a benefit computation. Typically, employees and their employers split that bill, which is why employees have 6.2% and 1.45%, respectively, held from their paychecks. An additional Medicare tax rate of 0.9% is applicable to the threshold amount mentioned. Are FICA taxes Social Security Tax? FICA taxes collected today help fund benefits for current retirees and other beneficiaries, and any unused money goes into the Social Security trust fund to help pay future benefits. This means that a highly-compensated employee will see Social Security taken once more, and they will not see the additional Medicare tax withheld from their pay until their current employer has paid them subject wages in excess of the $200,000 threshold. Employers: The Social Security Wage Base is Increasing in 2022 Thus, an individual with wages equal to or larger than $160,200 would contribute $9,932.40 to the OASDI program in 2023, and his or her employer would contribute the same amount. Those familiar government programs provide financial and health care benefits for tens of millions of retirees, disabled Americans and children. There's no employer match for Additional Medicare Tax. Federal: $24.95 to $64.95. a self-employed worker will pay a total of $18,228 in social security tax ($142,800 x 12.4 percent). This influences which products we write about and where and how the product appears on a page. Long Term Capital Gains Rate- 2019,2018,2017, Alternative Minimum Tax Calculator for 2017 & 2018. This means that there are going to be some changes as we move into 2023. Below are federal payroll tax rates and benefits contribution limits for 2022. If the organization you work for qualifies for a specific religious exemption, you won't have to pay FICA taxes. E-file W2, 1099, and 941 Forms now with 123PayStubs Social Security. Finally, add $8,370 and $1,957.50 to get your total FICA taxes: $10,327.50. The amount withheld will be based on the rates set by the local cities and jurisdictions. Only the social security tax has a wage base limit. Different rates apply for these taxes. Easiest FICA tax calculator for 2022 & 2023 - Internal Revenue Code World Bank: Quake caused damage worth US$5.1 billion in Syria, Prosecutors want Sam Bankman-Fried to use a flip phone as part of a more restrictive bail package, Mall landlords likely to get 'creative' to fill Nordstrom vacancies: experts, Amazon pauses construction on 2nd headquarters in Virginia, Canadian food bloggers share tips, tricks to make filling budget-friendly meals, 'Not every sale is a bargain': How to avoid common money mistakes. The aforesaid FICA tax calculator is only for medicare wage earners. The tax withheld from the employee paycheck towards the local income tax. That point could be brought up during performance reviews with your boss. Information provided on Forbes Advisor is for educational purposes only. FUTA tax: This stands for Federal Unemployment Tax Act. FICA tax deductions provide benefits to older Americans, retired people, widows and widowers, children who have lost working parents, disabled workers who qualify for benefits, and children of deceased workers. When you earn money, the IRS wants its cut as soon as possible. For self-only coverage, the maximum out-of-pocket expense amount is $5,300, up $350 from 2022. Read more, Tina Orem is an editor at NerdWallet. For 2022, the FICA tax rate for employers remained at the 7.65% level 6.2% for Social Security and 1.45% for Medicare used in 2022). This year, however, the basic personal amount was increased to $15,000. 751 Social Security and Medicare Withholding Rates. Wages and self-employment income above this threshold arent subject to Social Security tax. Employees are now subject to a 1.63% EI premium, and employers are now subject to a 2.28% EI premium. If you earn more than $147,000, youll pay Medicare taxes on the full amount. In 2023, Canadas federal tax brackets increased by 6.3% to account for inflation. Is FICA Taxes Paid by Self Employed Persons? [0]Internal Revenue Service. In certain years, the effective rate paid by employees, employers, and/or self-employed workers was less than the rate received by the trust funds, with the difference covered by general revenue. 2021-2022 FICA tax rates and limits. half by the employee and half by the employer. But is it really a good idea? American Opportunity Tax Credit Calculator. E-File now and get the filing status instantly. 2022 Wage Cap Jumps to $147,000 for Social Security Payroll Taxes Starting Jan. 1, the maximum earnings subject to the Social Security payroll tax will increase. Starting Octomber 15, you can enroll in 2022 plans. The Social Security Program is to protect people who have lost their earnings due to retirement or disability and for survivors of deceased workers. There is an additional 0.9% surtax on top of the standard 1.45% Medicare tax for those who earn over $200,000 (single filers) or $250,000 (joint filers). In 2022, the Medicare tax rate for employers and employees is 1.45% of all wages, unchanged . While the information on this site - Internal Revenue Code Simplified-is about legal issues, it is not legal advice or legal representation. [0]Social Security Administration. An additional Medicare tax is applicable to employees whose wages exceed a certain threshold limit. There's no wage base limit for Medicare tax. Self-employed taxpayers pay both the employer and employee portion. The amount withheld will be based on the information the employee provided on their federal Form W-4. Additional Medicare Tax:$100,000 x (0.9% + 1.45%) = $2,350. Our partners compensate us. whereas W-2 employees split the combined FICA tax rate of 15.3% with their employers, 1099 workers are responsible for the entire amount. If youre self-employed youre required to pay Social Security and Medicare taxes on your net earningsyour gross income minus deductions. limit the contribution and benefit base. For 2022, an employee will pay: For 2022, the self-employment tax imposed on self-employed . Create pay stubs for your employees with accurate tax calculations. This means that any income earned over this amount isn't subjected to taxes. If you would like to learn more about the entire payroll tax process, please check out ourstep-by-step guide here. As inflation rises, the cost of consumer goods typically increases along with wages. Start Here. The social security wage base limit is $160,200.The Medicare tax rate is 1.45% each for the employee and employer, unchanged from 2022. Before joining NerdWallet, Sheri was on the business and metro copy desks at the Los Angeles Times, where she worked on stories that won the 1998 Pulitzer Prize for breaking news. Follow the steps to compute additional medicare tax on your income. In 2023, Canada's federal tax brackets increased by 6.3% to account for inflation. 2022. 6.2%. The FICA meaning is Federal Insurance Contribution Act. All in all, they would contribute $11,506.50 in FICA taxes. OK92033) Property & Casualty Licenses, NerdWallet | 55 Hawthorne St. - 11th Floor, San Francisco, CA 94105. 15 Common Tax Deductions For Self-Employed. They might have sounded complicated at first, but once you break FICA taxes down, its pretty straightforward and manageable. Earned Income Tax Credit: Do You Qualify? If youre in the 29% tax bracket and earn less than $235,675 per year, then youll be entitled to claim the full $15,000 basic personal amount. With that limit in mind, the employee would pay 6.2% in Social Security taxes on $147,000, leading to a total of $9,114. What Are FICA Taxes? - Forbes Advisor The basic personal amount is a tax credit that all Canadian taxpayers can claim to help reduce the federal income tax they owe. Finally, a cost-of-living adjustment (COLA) will increase social security and SSI benefits for 2022 by 5.9 percent. Previously, she was a financial analyst and director of finance for several public and private companies. 100% of prior year taxes. For tax year 2023, for family coverage, the annual deductible is not less than $5,300, up from $4,950 for 2022; however, the deductible cannot be more than $7,900, up $500 from the limit for tax year 2022. How to calculate the Additional Medicare Tax if you get medicare wages as well as earn freelancing income? Sarah enjoys traveling, hiking and reading when she is not writing. Not only will the amount be withheld from an employee, but the employer will also contribute an equal amount to the social fund for the employees social security benefits and Medicare health insurance. Your employer will begin withholding the tax during the first pay period in which your wages exceed the $200,000 threshold, and will continue withholding the tax throughout the calendar year. For the2023 tax year, the wage base limit is$160,200 (which is up from $147,000 in 2022). Since inflation increased dramatically in 2022, the tax brackets saw considerable changes and were increased by 6.3% for 2023. Since FICA taxes are a type of payroll tax your employer must withhold from your wages, you'll see these deductions on your paycheck. Your email address will not be published. Your employer also will withhold 1.45% of your earnings for Medicare. The payer deducts, or withholds, the tax from the payee's income. Online Assist add-on gets you on-demand tax help. The rates remained the same for the 2020 tax year . Please email us [email protected]. Access your favorite topics in a personalized feed while you're on the go. Medicare Tax Go Up In 2022 | Medicare tax rate in 2022 - Century Medicare Once a quarter, you are required to pay the taxes withheld from employee paychecks as well as the employers matching tax contributions to the IRS. Employers pay the tax. Thus, Refer to "What's New" inPublication 15 for the current wage limit for social security wages; or Publication 51 for agricultural employers. The OASDI tax rate for wages paid in The tax funds a federal program that provides unemployment benefits to people who lose their jobs. For 2023, the FICA limit on paystubs is 160,200 dollars. Your employer will match that amountand provide the government with total FICA taxes representing 15.3% of your earnings. Here is a list of our partners and here's how we make money. IRS provides tax inflation adjustments for tax year 2022 So how does it feel now that youre a tax pro? persons. If tax brackets didnt change to account for this, then people would be paying a disproportionately high tax rate based on their income. What are FICA Taxes? 2022-2023 Rates and Instructions | OnPay For example, imagine a scenario where tax brackets arent indexed to inflation for 50 years. What Is the 2021 FICA Tax? Overview of Medicare & Social Security Tax The 2022 maximum FICA taxable wage cap increased to $147,000 from $142,800 in 2021. Higher-income taxpayers are required to pay higher Medicare taxes. Employers are not required to match this tax. Check out more of her work at kemberley.com. The amount withheld will be based on the information the employee provided on their state Form W-4. (on earnings over $200,000 for single filers; $250,000 for joint filers). PDF Bulletin: FICA/Medicare Rates for 2022 and Supplemental Tax Rates CountryPlease choose an optionAfghanistanAlbaniaAlgeriaAmerican SamoaAndorraAngolaAnguillaAntarcticaAntigua and BarbudaArgentinaArmeniaArctic OceanArubaAshmore and Cartier IslandsAtlantic OceanAustraliaAustriaAzerbaijanBahamasBahrainBaker IslandBangladeshBarbadosBassas da IndiaBelarusBelgiumBelizeBeninBermudaBhutanBoliviaBosnia and HerzegovinaBotswanaBouvet IslandBrazilBritish Virgin IslandsBruneiBulgariaBurkina FasoBurundiCambodiaCameroonCanadaCape VerdeCayman IslandsCentral African RepublicChadChileChinaChristmas IslandClipperton IslandCocos IslandsColombiaComorosCook IslandsCoral Sea IslandsCosta RicaCote d'IvoireCroatiaCubaCyprusCzech RepublicDenmarkDemocratic Republic of the CongoDjiboutiDominicaDominican RepublicEast TimorEcuadorEgyptEl SalvadorEquatorial GuineaEritreaEstoniaEthiopiaEuropa IslandFalkland Islands (Islas Malvinas)Faroe IslandsFijiFinlandFranceFrench GuianaFrench PolynesiaFrench Southern and Antarctic LandsGabonGambiaGaza StripGeorgiaGermanyGhanaGibraltarGlorioso IslandsGreeceGreenlandGrenadaGuadeloupeGuamGuatemalaGuernseyGuineaGuinea-BissauGuyanaHaitiHeard Island and McDonald IslandsHondurasHong KongHowland IslandHungaryIcelandIndiaIndian OceanIndonesiaIranIraqIrelandIsle of ManIsraelItalyJamaicaJan MayenJapanJarvis IslandJerseyJohnston AtollJordanJuan de Nova IslandKazakhstanKenyaKingman ReefKiribatiKerguelen ArchipelagoKosovoKuwaitKyrgyzstanLaosLatviaLebanonLesothoLiberiaLibyaLiechtensteinLithuaniaLuxembourgMacauMacedoniaMadagascarMalawiMalaysiaMaldivesMaliMaltaMarshall IslandsMartiniqueMauritaniaMauritiusMayotteMexicoMicronesiaMidway IslandsMoldovaMonacoMongoliaMontenegroMontserratMoroccoMozambiqueMyanmarNamibiaNauruNavassa IslandNepalNetherlandsNetherlands AntillesNew CaledoniaNew ZealandNicaraguaNigerNigeriaNiueNorfolk IslandNorth KoreaNorth SeaNorthern Mariana IslandsNorwayOmanPacific OceanPakistanPalauPalmyra AtollPanamaPapua New GuineaParacel IslandsParaguayPeruPhilippinesPitcairn IslandsPolandPortugalPuerto RicoQatarReunionRepublic of the CongoRomaniaRussiaRwandaSaint HelenaSaint Kitts and NevisSaint LuciaSaint Pierre and MiquelonSaint Vincent and the GrenadinesSamoaSan MarinoSao Tome and PrincipeSaudi ArabiaSenegalSerbiaSeychellesSierra LeoneSingaporeSlovakiaSloveniaSolomon IslandsSomaliaSouth AfricaSouth Georgia and the South Sandwich IslandsSouth KoreaSpainSpratly IslandsSri LankaSudanSurinameSvalbardSwazilandSwedenSwitzerlandSyriaTaiwanTajikistanTanzaniaThailandTogoTokelauTongaTrinidad and TobagoTromelin IslandTunisiaTurkeyTurkmenistanTurks and Caicos IslandsTuvaluUgandaUkraineUnited Arab EmiratesUnited KingdomUSAUruguayUzbekistanVanuatuVenezuelaViet NamVirgin IslandsWake IslandWallis and FutunaWest BankWestern SaharaYemenYugoslaviaZambiaZimbabwe For 2022, you pay Social Security taxes on any earnings up to $147,000; your employer will withhold 6.2% of each paycheck to cover your obligation. 2023 Forbes Media LLC. Medicare tax. Heres a breakdown of how they work. The maximum FICA tax imposed will be $9,114 ($147,000 x 6.2%), and there is no cap on the 1.45% Medicare tax. This amount is also commonly referred 2023 is set by statute at 6.2 percent for employees and employers, each. Your employer is also responsible for paying half of the total FICA obligation. And if youre a high wage earner, youll still have to pay the 0.9% Additional Medicare Tax above your earnings threshold. Generate pay stubs for your employees easily with best-in-class features. For higher-income taxpayers, there's a cap on the amount taken for Social Security, and an additional levy paid only by the employee for the Medicare portion. Tax rates under the HI program are For more information, see the Instructions for Form 8959 andQuestions and Answers for the Additional Medicare Tax. In fact, higher wage earners that reach a certain threshold amount, a figure that varies depending on their filing status, have to pay whats called an Additional Medicare Tax (sadly, the IRS didnt come up with a clever name for this one). Depreciation Accounting for Taxes Under 26US Code? Canadas tax brackets are indexed and adjusted to account for inflation. New 2022 FICA & Medicare limits - Ineo Global Mobility The FICA tax rate, which is the combined Social Security rate of 6.2 percent and the Medicare rate of 1.45 percent, remains 7.65 percent for 2022 (or 8.55 percent for taxable wages paid in excess of the applicable threshold). 4% OASDI on the first $160,200 of self-employment income, for a maximum tax of $19,865 (12.4% of $160,200); plus, 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 return of a married individual filing separately), plus. FICA. For 2022, the FICA tax rate for employers remained at the 7.65% level 6.2% for Social Security and 1.45% for Medicare used in 2022). This year, the annual contribution room for tax-free savings accounts is $6,500, up from the $6,000 contribution room in 2022. The wage base limit is the maximum wage that's subject to the tax for that year. In 2022, only the first $147,000 of your earnings are subject to the Social Security tax. These changes reflect cost-of-living adjustments to account for inflation. For more information, visit our. The term used is self-employment tax. $66.85 of FICA tax. As a small business owner, running payroll means having to understand all kinds of seemingly random acronyms like FICA. Of these, the Social Security tax and Medicare tax added together are referred to as the Federal Insurance Contributions Act (FICA). Then, multiply $135,000 by 1.45% (0.0145) to get your Medicare taxes: $1,957.50. Fortunately, the employee will get a credit on his or her tax return for any excess withheld.