The FICA tax is typically deducted from your salary at a rate of ________until your salary reaches a point where it is no longer taxed at the rate of ________ for Social Security.

Question

Quizplus · Accepted Answer

The FICA tax is composed of two parts: Social Security tax and Medicare tax. The Social Security tax is deducted at a rate of 6.20 percent until the salary reaches a certain maximum threshold, currently set at $142,800 in 2021. Once the salary exceeds this threshold, the Social Security tax is no longer applied. The Medicare tax is applied at a rate of 1.45 percent on all earnings, and there is no maximum threshold for this tax. Therefore, option B (7.65 percent; 6.20 percent) correctly identifies the rates at which FICA tax is typically deducted from an employee's salary.

The FICA Tax Is Typically Deducted from Your Salary at a Rate