Everything you Need to Know on Federal Payroll Tax Rates

Federal Payroll Tax Rates

Federal Payroll Taxes are tax which is imposed on employers or employees which is normally calculated as a percentage of the salaries that employers pay their workers (staff). In another way, the payroll tax is a tax withheld from an employee’s salary by an employer who remits it to the government on their behalf. Payroll taxes are deducted directly from the employee’s earnings and paid directly to the Internal Revenue Service (IRS) by the employer. It is understood that payroll taxes fall into two groups, there are

1 ====> Deduction from an employee’s salaries or wages

2 ====> Taxes paid by the employer based on the employee’s wage

Division of Payroll Taxes

In the United States of America, payroll taxes rate are divided into three main groups, there are

1 ====> Federal Income

2 ====> Social Security.

3 ====> Medicare

NOTE: The government also collects money for federal unemployment programs

Federal Income Payroll Tax

It is understood and believes that Federal Payroll taxes rate(s) covers Medicare contribution and Social security services that make up the Federal Insurance Contributions Act (FICA) tax. Though the Federal payroll tax rate varies, it is expected that an employee pays about 7.56%. This rate will now be divided between a 6.2% deduction for social security on a maximum salary of $137700 and 1.45% will cover Medicare.

On the aspect of Medicare, no salary limit, meanwhile, anyone earning more than $200000 or $250000 for married couples filing jointly will have to pay another 0.9% for Medicare.

Social Security Payroll Tax

As mentioned above, social security payroll taxes go into two trust funds, these are the Disability Insurance Trust Fund and the Old-Age and Survivors Insurances trust fund (OASI). The formal is for disability benefits while the later is used to pays retirement and survivor benefits.

The following set of people manage trust fund, they are the Secretary of the Treasury, the Secretary of Health and Human Services, the Commissioner of Social Security, two public trustees, and the Secretary of Labor.

Medicare Payroll Tax

It was also mentioned above in the article that Federal Payroll Taxes goes to Medicare. Don’t be surprised that these payroll deductions also move to separate trust funds. The Supplementary Medical Insurance Trust Fund and the Hospital Insurance Trust Fund.

====> The Supplementary Medical Insurance Trust Fund is used to assists the payment of Medicare Parts B and D and other Medicare program administration costs.

The part B of it covers laboratory tests and screenings, outpatient care, x-rays, ambulance service, and many other items while part D helps with the prescription of drugs.

====> The Hospital Insurance Trust Fund pays for Medicare Part A and the associated administration fees. Part A assists in covering hospital care, skilled nursing inpatient care, and, in some cases, home care.

Individuals enrolled in Medicare may also have to pay a portion of their medical fees at the time of use, as well as income-based fees to Medicare.

Popular Post

Download Credit Karma App for Free

Sam’s Club Credit Card Login Guide

List of Best Discover it Credit Cards

Mortgage Calculator Zillow

eBay Credit Card Login & Payment Guide


You have done well here by spending your time to read through this article about Federal Payroll Tax Rate(s). This article gives a brief definition of Federal Payroll tax, categories or groups which taxes are divided into. He further explains details of this federal payroll tax rate and who are in charge of each group.

You May Also Like

About the Author: Gadgetsright

Adeola (Jasper) is someone who loves everything about technology. He devoted to everything that is tech-related and tries his best to produce useful and quality articles about mobiles, computers and other related products.

Leave a Reply

error: Content is protected !!