As of January 1, 2016, employees and employers each pay what percentage for Social Security tax?

As of January 1, 2016, employees and employers each pay what percentage for Social Security tax?

• A. 5.0%
• B. 6.2%
• C. 7.5%
• D. 8.0%

Answer: (B)

As of January 1, 2016, both employees and employers are required to contribute a rate of 6.2% each for Social Security tax on the first $118,500 of an employee's earnings. This contribution is part of the Federal Insurance Contributions Act (FICA), which funds Social Security and Medicare. The Social Security tax rate remained at 6.2% until 2021, which is crucial for employers and employees to understand in order to correctly calculate payroll taxes. Knowing this rate helps ensure that both employees are making their required contributions toward Social Security benefits and employers are adhering to federal regulations governing payroll taxes. Therefore, the correct answer of 6.2% reflects the mutual responsibility that both parties share in financing the Social Security system.

As of January 1, 2016, both employees and employers are required to contribute a rate of 6.2% each for Social Security tax on the first $118,500 of an employee's earnings. This contribution is part of the Federal Insurance Contributions Act (FICA), which funds Social Security and Medicare. The Social Security tax rate remained at 6.2% until 2021, which is crucial for employers and employees to understand in order to correctly calculate payroll taxes.

Knowing this rate helps ensure that both employees are making their required contributions toward Social Security benefits and employers are adhering to federal regulations governing payroll taxes. Therefore, the correct answer of 6.2% reflects the mutual responsibility that both parties share in financing the Social Security system.