United States

Social security contributions in detail

Both the employer and employee are subject to separate social security taxes equal to 6.2% (i.e. a total of 12.4%) of the employee’s gross wage amount, up to but not exceeding the social security wage base (indexed to USD 132,900 in 2019). Wages earned over the maximum wage base are not subject to social security tax.

To fund Medicare, a separate tax of 1.45% of the employee's income is paid directly by the employer, and an additional 1.45% tax is withheld from the employee's pay check, for a total of 2.9%. Employees pay a 0.9% additional Medicare tax on wages to the extent they exceed the following threshold amounts, which are based on the employees’ filing status:

If Filing

Then the 0.9% tax applies to salary above (USD)

Single 200,000
Married filing jointly 250,000
Married filing separate 125,000
Head of household (with qualifying person) 200,000
Qualifying widow(er) with dependent child 200,000

 

Unemployment tax

Employers must pay a tax equal to 6% of the first USD 7,000 in wages, which provides for payments of unemployment compensation to workers who have lost their jobs.

Employers may receive a credit of up to 5.4% of taxable income for paying state unemployment taxes. State unemployment tax rates vary between 0.2% and 2.6%.

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Author: FordHarrison

Date: April 2020


Note: All currency conversions into EUR were made on 1 February 2019, using a mid-market rate.