What Is the Federal Tax Rate on Wages?
The federal tax rate on wages has multiple components: the federal income tax, which is a progressive tax, and the Social Security and Medicare taxes, which make up the FICA taxes and are flat taxes.
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Federal Income Tax
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The federal income tax is a progressive tax, meaning the more money you make, the higher the percentage you will pay on your income taxes. As of 2009, the tax brackets range from 10 percent to 35 percent.
Who Pays the Federal Income Tax?
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The federal income tax is the sole responsibility of the employee; the employer does not contribute to the income tax bill.
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Social Security Tax
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The Social Security tax is 12.4 percent of your wages as of 2009. This tax only applies to the first $106,800 of your wages for 2009 and this limit was the same for 2010.
Medicare Tax
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The Medicare tax is 2.9 percent of your wages as of 2009. This tax applies to all of your wages.
Who Pays the FICA Taxes?
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If you are an employee, you split the FICA taxes with your employer so you only pay 6.2 percent of your wages in Social Security taxes and 1.45 percent of your wages in Medicare taxes. If you are an independent contractor, you must pay the entire amount on your own.
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References
- Photo Credit Tax Calculator on wooden table image by Adam Radosavljevic from Fotolia.com
