What is the total FICA tax for an annual salary of $165,000 under the current maximum taxable earnings?

• A. $9,014.10
• B. $11,568.00
• C. $8,500.00
• D. $10,200.50

Answer: (A)

FICA tax, which includes Social Security and Medicare taxes, is a key component of payroll tax contributions. For the year 2023, the Social Security tax rate is 6.2% on earnings up to a maximum taxable limit of $160,200, and the Medicare tax rate is 1.45% on all earnings with an additional 0.9% applied to earnings exceeding $200,000.

For an annual salary of $165,000, here's how the FICA tax is calculated:

1. Social Security Tax: The maximum taxable earnings for Social Security for the year 2023 is $160,200. Therefore, the Social Security tax would be calculated as follows:

[

160,200 \times 0.062 = 9,932.40

]

2. Medicare Tax: Since the entire salary of $165,000 is below the threshold for the additional Medicare tax, the calculation for the Medicare tax remains straightforward:

[

165,000 \times 0.0145 = 2,392.50

]

3. Total FICA Tax: Adding both components together gives:

[

9