What Percentage of Federal Taxes and Medicare Are Deducted out of Gross Pay?

You probably know exactly how much money you take home in your paycheck, but have you recently checked what percentage of federal taxes and Medicare are deducted out of gross pay? The answers may surprise you.

Gross Pay Withheld for Social Security

For 2017, an employee is taxed 6.2 percent of their gross pay for Social Security, up to $127,200. After an employee has earned that much, Social Security payments are no longer deducted for the remainder of the year. This makes the 2017 maximum amount of Social Security tax $7,886.40. For 2018, the percentage stays the same but the wage amount rises to $128,400, making the maximum amount of Social Security tax $7,960.80. The 2018 limit was originally announced as $128,700, but the amount was later reduced by $300.

Gross Income Deducted for Medicare

For 2017 and 2018, every employee pays 1.45 percent of their gross pay to Medicare, and there is no salary cap. However, ever since 2013, those individuals earning more than $200,000, or $250,000 for married couples filing jointly, must pay an additional 0.9 percent in Medicare taxes, for a total of 2.35 percent. To figure out the percentage of gross pay withheld for Medicare, simply multiply your gross earnings by 1.45 percent and subtract the amount from the gross earnings. If you are a high income individual, multiply 2.35 percent by the amount of your salary over $200,000 or $250,000 and subtract that answer from the amount over those numbers. Add the amount you pay for Medicare under $200,000 or $250,000 to the 2.35 percent you pay over those limits to figure out your total Medicare taxes for the year.

Gross Pay for Taxes

The percentage of your gross pay that goes to taxes is more than just Social Security and Medicare, but that percentage depends not only on how much you have asked your employer to withhold on your Form W-4, but also on state and local taxes, including state disability insurance. Thus, the percentage of your gross pay going to taxes is very much an individual matter. According to USA Today, the average American in 2017 paid $10,489 each year in federal, state and local income taxes. However, that amount is just 14 percent of the average survey respondent’s gross income, and these respondents presumably reflect overall American demographics.

About the Author

A graduate of New York University, Jane Meggitt's work has appeared in dozens of publications, including PocketSense, Financial Advisor, Sapling, nj.com and The Nest.


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