The
Social Security Administration announced the 2016 wage base for computing the
amount of payroll tax will be $118,500, the same as 2015. The wage base is the
maximum amount of wages subject to the social security portion of the payroll
tax you may know as "FICA." The total FICA rate is composed of two
parts and the rates for both remain the same for 2016. The social security tax
portion is 6.2% of an employee's wages on amounts up to $118,500. The basic
Medicare portion is 1.45% of an employee's wages, no matter the amount. Note
that employers must also withhold an additional 0.9% Medicare tax on wages over
$200,000.
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