FICA Taxes

Taxes under the Federal Insurance Contributions Act (FICA) are composed of the old-age, survivors, and disability insurance taxes—also known as social security taxes—and the hospital insurance tax, also known as Medicare taxes. Different rates apply for these taxes.

Social Security and Medicare Withholding Rates

The current tax rate for social security is 6.2% for the employer and 6.2% for the employee, or 12.4% total. The current rate for Medicare is 1.45% for the employer and 1.45% for the employee, or 2.9% total.

Additional Medicare Tax Withholding Rate

Additional Medicare Tax applies to an individual's Medicare wages that exceed a threshold amount based on the taxpayer's filing status. Employers are responsible for withholding the 0.9% Additional Medicare Tax on an individual's wages paid in excess of $200,000 in a calendar year, without regard to filing status. An employer is required to begin withholding Additional Medicare Tax in the pay period in which it pays wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. There's no employer match for Additional Medicare Tax.

Wage Base Limits

Only the social security tax has a wage base limit. The wage base limit is the maximum wage that's subject to the tax for that year. For earnings in 2020, this base is $137,700. There is no wage base limit for Medicare tax. All covered wages are subject to Medicare tax.

In Virginia, as in all states, FICA taxes are federal taxes and are consistent across the country, not varying by state. FICA taxes include Social Security and Medicare taxes. The Social Security tax rate is 6.2% for both employers and employees, totaling 12.4%, up to the wage base limit, which changes annually (for example, it was $137,700 in 2020). There is no wage base limit for Medicare taxes, which are set at a rate of 1.45% for both employers and employees, totaling 2.9%. Additionally, there is an Additional Medicare Tax of 0.9% that employers must withhold from employees' wages exceeding $200,000 regardless of the employee's filing status, with no employer match required. It's important for employers and employees in Virginia to be aware of these federal tax obligations and ensure they are correctly withheld and paid to the IRS.