What is the FICA withholding limit for 2012?

Isadora Duncan

Answered Last

Starting with 2011 it was $106,800

The tax is payable on the first $106,800 of earnings. Earning are defined slightly differently for this than what is used for withholding, (or other things). Additionally, a portion of what was a total of 15.3% tax (half employer paid, half employee), is dedicated to Medicaid and has no maximum earnings.

HOWEVER:

Under current law, employees pay a 6.2% Social Security tax on all wages earned up to $106,800 (in 2011) and self-employed individuals pay 12.4% Social Security self-employment taxes on all their self-employment income up to the same threshold.

For 2011, the Senate passed 2010 Tax Reform Act gives a two-percentage-point payroll/self-employment tax holiday for employees and self-employeds. As a result, employees will pay only 4.2% Social Security tax on wages and self-employment individuals will pay only 10.4% Social Security self-employment taxes on self-employment income up to the threshold.

Adding info for 2012: which because of the discount allowed in how they were paid the previous year,

will be felt by many more people).

Generally, FICA taxes are collected at a rate of 7.65% on gross earnings, which are earnings before any deductions are taken. The breakdown of FICA is 6.2% for Social Security (Old-Age, Survivors, and Disability Insurance or OASDI) and 1.45% for Medicare. The following table shows the FICA limits for 2005 through 2012: 2012 FICA Tax and Social Security Limits
  • FICA Tax Rate = 7.65%
  • Social Security Limit = $110,100
  • Maximum Social Security Contribution = $6,826.20
2011 FICA Tax and Social Security Limits
  • FICA Tax Rate = 7.65% (see note below)
  • Social Security Limit = $106,800
  • Maximum Social Security Contribution = $6,621.60 (employer) / $4485.60 (employee)

Note: In 2011, the FICA tax rate for employees was lowered to 5.65%. The employer tax rate remained unchanged, while the Social Security rate for employees was lowered to 4.20%.

The maximum savings for 2011 will be $2,136 (2% of $106,800).

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Category: Insurance

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