The tax base for Medicare tax is the same as the tax base for social security tax.
True
Yes, that is correct. The tax base for Medicare tax is the same as the tax base for Social Security tax. Both taxes are collectively referred to as FICA taxes (Federal Insurance Contributions Act). Specifically, FICA taxes comprise of two taxes, which are Social Security tax and Medicare tax.
The Social Security tax and Medicare tax have different rates. The Social Security tax rate is 6.2%, while the Medicare tax rate is 1.45%. Employers and employees each contribute the same percentage rates for these taxes, which are currently 6.2% for Social Security and 1.45% for Medicare, for a total 7.65% (with some exemptions for certain employees).
The tax base for both Social Security and Medicare taxes is the employee’s wages, salaries, and tips. These taxes are deducted from the employee’s paycheck, with the employer also contributing an equivalent amount on behalf of the employee.
It is important to note that there is a wage base limit to Social Security taxes that changes every year. Any amount earned above this limit is not subject to Social Security taxes. In 2021 and 2022, the Social Security wage base limit is $142,800. However, there is no such limit for Medicare taxes.
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