The payroll tax rates for Social Security FICA will remain unchanged this year, as announced by the Federal Government. The maximum amount of earnings per social security taxes will stay the same at $118,500, as earnings above this will not be subject to Social Security payroll tax. The employment tax rates 2017 for payroll has various amounts that must be reported correctly to remain in full compliance with Federal and State rules and regulations.
Social Security & FICA Employer Payroll Tax Rates
Social Security tax is equal to 12.4 percent tax and is split up between the employer and employee, which funds Social Security. Employers and employees who fail to pay in Social Security tax are subject to significant fines and penalties, including interest due on unpaid amounts.
QuickBooks has incorporated the employment tax rates into their system to ensure you remain in compliance. They have a great free trial payroll offer that is definitely worth trying out.
FICA tax rates, in accordance with IRS rules and regulations are made up of Social Security and Medicare Payroll taxes. Medicare tax is 1.45% of employee earnings and there is no cap on Medicare taxes for employees. Thus, the total combined FICA taxes with Social Security and Medicare equal 7.65%.
If you are self-employed you are required to pay employer & employee FICA taxes to remain in compliance with employment tax rates for 2017 payroll. Most payroll systems will calculate these amounts for you, as it can become quite technical and confusing if you are self-employed. Additionally, QuickBooks offer some great free information on payroll that can be quite helpful.
Payroll Rate Changes
As previously stated, this year the rates remained the same, which is highly unusual. All of the payroll tax rates are continuously updated in the top pay programs like QuickBooks. They offer a free payroll trial that we highly suggest trying out if you are setting up a payroll system.
Higher earners can expect to pay an additional medicare tax on top of the normal rate discussed. You will be required to pay an additional .9% if filing married jointly and earn $250,000 or more. Further, this tax applies to married taxpayers filing separately if you make $125,000 or more. In addition, this tax is also applied to single taxpayers who earn $200,000 or more. This additional tax is not the AMT tax that many get it confused with, as it’s complete separate.
These payroll tax rates are changed by the Federal government in line with the cost of living adjustment calculations. It’s changed to ensure inflation doesn’t hurt the purchasing power for those receiving Social Security benefits.
We also recommend taking a look at the QuickBooks, as this is a great way to learn the basics of implementing a payroll system for your business.