Internal Revenue Service United States Department of the Treasury
Module 1: Payroll Taxes and Federal Income Tax Withholding

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Payroll Taxes

Payroll Tax Rates
Social Security tax rate 6.20%
Medicare tax rate 1.45%
Total payroll taxes 7.65%

If an employee earns $1,000, the payroll taxes are:

Social Security tax $62.00
Medicare tax $14.50
Total payroll taxes $76.50

The employer deducts $76.50 from employee's pay and it will be sent to the federal government.


Tax Tip

There is a maximum annual amount of Social Security tax withheld per employee. Social Security taxes are not withheld on amounts over the earnings limit. For 2014, the earnings limit was $117,000, and the maximum Social Security tax was $7,254 ($117,000 x 6.2%). There is no limit on the amount of wages subject to Medicare tax.

 

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