What is the Social Security tax rate?

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Study for the Accounting CBE Exam. Gain insights with flashcards and multiple-choice questions, each paired with detailed explanations. Prepare for your accounting certification!

Multiple Choice

What is the Social Security tax rate?

Explanation:
The Social Security tax rate is 6.2% of wages up to the annual wage base. This tax is part of FICA payroll taxes, and it is paid by both employees and employers (each contributes 6.2%), so the total rate on wages within the cap is 12.4%. Wages above the cap aren’t subject to Social Security tax. The Medicare tax is separate at 1.45% with no cap, and an additional 0.9% may apply for higher earners. So the rate asked is 6.2%.

The Social Security tax rate is 6.2% of wages up to the annual wage base. This tax is part of FICA payroll taxes, and it is paid by both employees and employers (each contributes 6.2%), so the total rate on wages within the cap is 12.4%. Wages above the cap aren’t subject to Social Security tax. The Medicare tax is separate at 1.45% with no cap, and an additional 0.9% may apply for higher earners. So the rate asked is 6.2%.

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