2015 Federal Payroll Tax Rate Changes
| 2015 Current Year | 2014 Prior Year | |
| FICA / OASDI Employee rate Maximum liabi ... | 6.2% $7,347 6.2% $7,347 $118,500 | 6.2% $7,254 6.2% $7,254 $117,000 |
| Medicare Employee and Employer rate Maxi ... | 1.45% No limit No limit 0.9% | 1.45% No limit No limit 0.9% |
| FUTA Employer rate Wage limit | 0.6% $7,000 | 0.6% $7,000 |
| Social Security Benefits Earned income m ... | $15,720 No limit | $15,480 No limit |
Will Social Security benefits increase or decrease in 2015?
While the tax bite on employees will be rising, retirees and others who rely on Social Security and Supplemental Security Income (SSI) benefits-nearly 64 million Americans-will see their payments increase by 1. 7 percent in 2015 due to the annual cost of living adjustment (COLA), slightly more than the 1. 5 percent COLA that took effect in 2014.
What are the threshold annual compensation amounts for the additional Medicare tax?
The threshold annual compensation amounts that trigger the Additional Medicare Tax are: •$250,000 for married taxpayers who file jointly. • $125,000 for married taxpayers who file separately.
What is the additional Medicare tax and how does it work?
The Additional Medicare Tax raises the wage earner’s portion on compensation above the threshold amounts to 2.35 percent; the employer-paid portion of the Medicare tax on these amounts remains at 1.45 percent.
What was the Medicare tax rate in 2014?
1.45 percentFor 2014, the social security tax rate is 6.2 percent, and the Medicare tax rate is 1.45 percent.
What is the tax rate for the Medicare tax?
1.45%Medicare tax: 1.45%. Sometimes referred to as the “hospital insurance tax,” this pays for health insurance for people who are 65 or older, younger people with disabilities and people with certain conditions.
How do you calculate your Medicare tax?
The Medicare withholding rate is gross pay times 1.45 %, with a possible additional 0.9% for highly-paid employees. Your portion as an employer is also 1.45% with no limit, but you (the employer) don't have to pay the additional 0.9% For a total of 7.65% withheld, based on the employee's gross pay.
What is the Medicare tax rate for 2017?
1.45 percentFor employers and employees, the Medicare payroll tax rate is a matching 1.45 percent on all earnings, bringing the total Social Security and Medicare payroll withholding rate for employers and employees to 7.65 percent each—with only the Social Security portion (6.2 percent) limited to the $127,200 taxable-maximum ...
How does the 3.8 Medicare tax work?
The Medicare tax is a 3.8% tax, but it is imposed only on a portion of a taxpayer's income. The tax is paid on the lesser of (1) the taxpayer's net investment income, or (2) the amount the taxpayer's AGI exceeds the applicable AGI threshold ($200,000 or $250,000).
Is there a cap on Medicare tax?
There is no limit on the amount of earnings subject to Medicare (hospital insurance) tax. The Medicare tax rate applies to all taxable wages and remains at 1.45 percent with the exception of an “additional Medicare tax” assessed against all taxable wages paid in excess of the applicable threshold (see Note).
Are Medicare premiums based on adjusted gross income?
Medicare premiums are based on your modified adjusted gross income, or MAGI. That's your total adjusted gross income plus tax-exempt interest, as gleaned from the most recent tax data Social Security has from the IRS.
Why is Medicare taxed?
How Are Medicare Taxes Used? The Medicare tax helps fund the Hospital Insurance (HI) Trust Fund. It's one of two trust funds that pay for Medicare. The HI Trust Fund pays for Medicare Part A benefits, including inpatient hospital care, skilled nursing facility care, home health care and hospice care.
What is the Medicare tax rate for 2018?
1.45%Note: The 7.65% tax rate is the combined rate for Social Security and Medicare. The Social Security portion is 6.20% on earnings up to the applicable taxable-maximum amount. The Medicare portion is 1.45% on all earnings.
What is the FICA rate for 2018?
7.65%For 2018, the FICA tax rate for employers is 7.65%—6.2% for OASDI and 1.45% for HI. RIA illustration On a salary of $128,400 (or more), an employee and his employer each will pay $7,960.80 in Social Security tax in 2018.
What is the Medicare tax rate for 2022?
1.45%For 2022, the FICA tax rate for employers is 7.65% — 6.2% for Social Security and 1.45% for Medicare (the same as in 2021).
How much FICA do I have to pay for 2015?
Household employers are required to withhold and pay FICA for domestic workers (aged 18 years and older) if paid cash wages of $1,900 or more in 2015. The $1,000 per calendar quarter threshold continues to apply for FUTA. These taxes are reported on Schedule H of the employer’s personal tax return (form 1040), but must be remitted through withholding or estimated payments during the year.
How much can I earn before my Social Security benefits are reduced?
A social security beneficiary under full retirement age can earn $15,720 before benefits are reduced. For every $2 a person under full retirement age earns over $15,720, $1 is withheld from benefits. In the year an employee reaches full retirement age, $1 in benefits will be withheld for each $3 they can earn above $41,880 until the month the employee reaches full retirement age. Once the employee reaches full retirement age or older, their benefits are not reduced regardless of how much they earn.
Do you have to include employer sponsored health benefits on 2014 W-2?
Employers are required to include the aggregate cost of employer sponsored health benefits on the 2014 W-2’s in Box 12 with code DD. It is for informational purposes only and will not be included in taxable income. Small employers who file fewer than 250 Forms W-2 are exempt.
How many people will pay Social Security taxes in 2015?
Of the estimated 168 million workers who will pay Social Security taxes in 2015, about 10 million will pay higher taxes because of the increase in the taxable maximum, the SSA said. Social Security and Medicare payroll withholding are collected together as the Federal Insurance Contributions Act (FICA) tax.
How much is Medicare tax?
For most Americans, the Medicare portion of the FICA tax remains at 2.9 percent, of which half ( 1.45 percent) is paid by employees and half by employers. Unlike Social Security, there is no limit on the amount of earnings (which includes salary and bonus income) subject to the Medicare portion of the tax. This results, for most American wage ...
What is the tax rate for Medicare and Social Security?
Note: The 7.65% tax rate is the combined rate for Social Security and Medicare. The Social Security portion is 6.20% on earnings up to the applicable taxable maximum amount. The Medicare portion is 1.45% on all earnings.
What is the FICA tax rate?
This results, for most American wage earners, in a total FICA tax of 15.3 percent (Social Security plus Medicare), half of which is paid by employees and half by employers. Again, self-employed individuals are responsible for the entire FICA tax rate of 15.3 percent (12.4 percent Social Security plus 2.9 percent Medicare).
What is the additional Medicare tax?
The Additional Medicare Tax raises the wage earner’s portion on compensation above the threshold amounts to 2.35 percent ; the employer-paid portion of the Medicare tax on these amounts remains at 1.45 percent. The IRS has posted responses to frequently asked questions regarding the Additional Medicare Tax.
Is Medicare a payroll tax?
The IRS has posted responses to frequently asked questions regarding the Additional Medicare Tax. Net Investment Income Tax. Although it is not a payroll tax, HR professionals also should be aware of the net investment income tax (NIIT) that high earners must pay when they file their income tax returns.
Which states have increased FUTA?
The Department of Labor announced that employers will be subject to an increased FUTA tax rate in January 2015 based on FUTA taxable wages paid during 2014 in these affected states: California, Connecticut, Indiana, Kentucky, New York, North Carolina, Ohio and the Virgin Islands.
What does Medicare tax mean?
Medicare tax is a federal payroll tax that pays for a portion of Medicare. Because of the $284 billion paid in Medicare taxes each year, about 63 million seniors and people with disabilities have access to hospital care, skilled nursing and hospice.
How does it work?
Medicare tax is a two-part tax where you pay a portion as a deduction from your paycheck, and part is paid by your employer. The deduction happens automatically as a part of the payroll process.
What is the Medicare tax used for?
The Medicare tax pays for Medicare Part A, providing health insurance for those age 65 and older as well as people with disabilities or those who have certain medical issues. Medicare Part A, also known as hospital insurance, covers health care costs such as inpatient hospital stays, skilled nursing care, hospice and some home health services.
What's the current Medicare tax rate?
In 2021, the Medicare tax rate is 1.45%. This is the amount you'll see come out of your paycheck, and it's matched with an additional 1.45% contribution from your employer for a total of 2.9% contributed on your behalf.
Frequently asked questions
Medicare tax is a required employment tax that's automatically deducted from your paycheck. The taxes fund hospital insurance for seniors and people with disabilities.
What is Pease tax?
PEP and Pease. PEP and Pease are two provisions in the tax code that increase taxable income for high-income earners. PEP is the phaseout of the personal exemption and Pease (named after former Senator Donald Pease) reduces the value of most itemized deductions once. a taxpayer’s adjusted gross income reaches a certain point.
What is the AMT exemption for 2015?
The AMT exemption amount for 2015 is $53,600 for singles and $83,400 for married couple. filing jointly (Table 5).
What is the CPI for the IRS?
The IRS uses the Consumer Price Index (CPI) to calculate the past year’s inflation and adjusts income thresholds, deduction amounts, and credit values accordingly. Rather than directly adjusting last year’s values for annual inflation, each provision is adjusted from a specified base year.
Why do people get pushed into higher tax brackets?
This is the phenomenon by which people are pushed into higher income tax brackets or have reduced value from credits or deductions due to inflation instead of an actual increase in real income.
How are tax parameters adjusted for inflation?
Each tax parameter is adjusted for inflation by taking its base value (from legislation) and multiplying it by the current fiscal year’s average Consumer Price Index (CPI) and then dividing that by the base fiscal
What is the maximum earned income tax credit for 2015?
2015’s maximum Earned Income Tax Credit for singles, heads of households, and joint filers is $503 if the filer has no children (Table 6). For one child the credit is $3,359, two children is $5,548, and three or more children is $6,242.
When was the alternative minimum tax created?
Alternative Minimum Tax. Since its creation in the 1960s , the Alternative Minimum Tax (AMT) has not been adjusted for inflation. Thus, Congress was forced to “patch” the AMT by raising the exemption amount to prevent middle class taxpayers from being hit by the tax as a result. of inflation.
How much Medicare tax do self employed pay?
Medicare taxes for the self-employed. Even if you are self-employed, the 2.9% Medicare tax applies. Typically, people who are self-employed pay a self-employment tax of 15.3% total – which includes the 2.9% Medicare tax – on the first $142,800 of net income in 2021. 2. The self-employed tax consists of two parts:
What is the Medicare tax rate for 2021?
Together, these two income taxes are known as the Federal Insurance Contributions Act (FICA) tax. The 2021 Medicare tax rate is 2.9%. Typically, you’re responsible for paying half of this total Medicare tax amount (1.45%) and your employer is responsible for the other 1.45%.
How is Medicare financed?
1-800-557-6059 | TTY 711, 24/7. Medicare is financed through two trust fund accounts held by the United States Treasury: Hospital Insurance Trust Fund. Supplementary Insurance Trust Fund. The funds in these trusts can only be used for Medicare.
How is the Hospital Insurance Trust funded?
The Hospital Insurance Trust is largely funded by Medicare taxes paid by employees and employers , but is also funded by: The Hospital Insurance Trust Fund pays for Medicare Part A benefits and Medicare Program administration costs. It also pays for Medicare administration costs and fighting Medicare fraud and abuse.
What is Medicare Part A?
Medicare Part A premiums from people who are not eligible for premium-free Part A. The Hospital Insurance Trust Fund pays for Medicare Part A benefits and Medicare Program administration costs. It also pays for Medicare administration costs and fighting Medicare fraud and abuse.
When was the Affordable Care Act passed?
The Affordable Care Act (ACA) was passed in 2010 to help make health insurance available to more Americans. To aid in this effort, the ACA added an additional Medicare tax for high income earners.
Who is Christian Worstell?
Christian Worstell is a licensed insurance agent and a Senior Staff Writer for MedicareAdvantage.com. He is passionate about helping people navigate the complexities of Medicare and understand their coverage options. .. Read full bio
