The FICA rates have changed for tax year 2011. Our small business payroll software has been updated to reflect these changes. If you are an employer, small business or payroll service provider you can use Payroll Mate to comply with the new payroll tax calculations.
Below are the 2011 FICA Rates:
Employee Social Security 2011 FICA Rate: 4.2% (in 2011 the employee rate does not match the employer one)
Employer Social Security 2011 FICA Rate: 6.2%
Employee Medicare 2011 FICA Rate: 1.45%
Employer Medicare 2011 FICA Rate: 1.45%
The maximum amount of wages subject to the social security tax for 2011 is $106,800. There is no limit on the amount of wages subject to the Medicare tax.
FICA stands for the Federal Insurance Contributions Act. FICA taxes are comprised of two separate taxes, social security and Medicare taxes that are paid on wages earned for services performed. Employers withhold and pay their employees’ share of the FICA taxes and also pay the employer share. FICA is imposed by federal government to fund Social Security and Medicare federal programs. Employers should implement the 4.2% employee social security tax rate as soon as possible, but not later than January 31, 2011. After implementing the new 4.2% FICA rate, employers should make an offsetting adjustment in a subsequent pay period to correct any over withholding of social security tax as soon as possible, but not later than March 31, 2011.