1405.Social Security and Medicare Tax Rates
1405.1What rates do employers and employees pay on Social Security and Medicare taxes?
Employers and employees pay Social Security and Medicare taxes at the same rate on wages up to the maximum amounts creditable for each program for the year. (See §1301.) Certain employers did not pay Social Security Tax for qualified new hires for most of 2010. For 2011, employees paid Social Security tax at a lower rate than employers.
1405.2Are tips included in determining wages?
Yes. Tips are included in determining the maximum wages on which the employer's tax is payable. (See §1329.) See §1408 for allocated tips.
1405.3How is the tax rate calculated?
The Social Security tax rate is the sum of the retirement, survivors, and disability insurance tax rate and the hospital insurance tax rate on the wages. The following chart shows the rates that apply to both employers and employees:
Calendar year | Retirement, survivors, and disability insurance rate | Hospital insurance rate | Combined rate |
|---|---|---|---|
1985 | 5.70% | 1.35% | 7.05% |
1986-1987 | 5.70% | 1.45% | 7.15% |
1988-1989 | 6.06% | 1.45% | 7.51% |
1990 -20101 | 6.20% | 1.45% | 7.65% |
2011 | 4.20% (employees) 6.20% (employers) | 1.45% | 5.65% (employees) 7.65% (employers) |
1The Hiring Incentives to Restore Employment (HIRE) Act exempted employers from the employer’s share of the Social Security tax on wages paid to qualified employees from March 19, 2010 through December 31, 2010.
Last Revised: Aug. 8, 2011