Giving students an environment where they can explore learning in new and innovative ways is an exciting part of our future. But the main focus of this vision is that kids do matter...all children, everyone of them has the ability and opportunity to learn. We provide that in the Madison schools and look forward to a great future of success.
Image source: Getty Images. Social Security tax is one part of the Federal Insurance Contribution Act (FICA) tax, and it is assessed at a rate of 12.4%. This is split evenly between the employee and employer, and it applies to earned income up to $118,500 for 2016 -- resulting in a maximum Social Security tax of $14,694. The remainder of FICA tax goes to Medicare.
Because beginning this year, Medicare taxes will be assessed on earnings up to $125,000 per year, nearly twice the $53,400 subject to Social Security taxes. Here's what's happening: Since 1967, when the Medicare program was established, a portion of our Social Security taxes has gone to pay for it every year. This year, of the 7.65% payroll tax employees and employers each contribute to Social Security, 6.2% is strictly for Social Security while the remaining 1.45% is for Medicare. It was easier just to lump the taxes together under the general heading of Social Security when the taxes were applied evenly to earnings.