![handle is hein.tera/crstax0365 and id is 1 raw text is: Order Code 94-28 EPW
Updated January 13, 2004
CRS Report for Congress
Received through the CRS Web
Social Security and Medicare Taxes and
Premiums: Fact Sheet
Dawn Nuschler
Domestic Social Policy Division
Taxes: Financing for Social Security-Old Age, Survivors, and Disability Insurance
(OASDI)-and the Hospital Insurance (HI) part of Medicare is provided primarily by
taxes levied on wages and net self-employment income. They are referred to as FICA
taxes (for Federal Insurance Contributions Act) and SECA taxes (for Self-Employment
Contributions Act). The FICA tax is paid by employees and employers; the SECA tax is
paid by the self-employed (about 96% of the work force is required to pay them). Both
have three components: OASI, DI, and HI. The FICA tax was first levied in 1937 at a
rate of 1% (for both employee and employer) on earnings up to $3,000. The current rate
is 7.65% - 6.2% for OASDI, 1.45% for HI. The SECA rate for the self-employed is
12.4% for OASDI, 2.9% for HI. The OASDI tax is levied on earnings up to $87,900 in
2004 (earnings subject to the OASDI tax are indexed to increases in the national average
wage). The HI tax is levied on all earnings. This fact sheet is updated annually.'
FICA and SECA Tax Rates (in percent)
Rate paid bY employee & emiployevr ;I/-emnpi.
0 OASI D[ OA\SDI H]I I Total I rah, MaIxiimm talxable eri~
1937 1.0 1.0 $3,000
1950 1.5 3.0 $3,000
1960 3.0 .25 2.75 3.0 4.5 $4,800
1970 3.65 .55 4.20 0.60 4.8 6.9 $7,800
1980 4.52 .56 5.08 1.05 6.13 8.1 $25,900
1990 5.60 .60 6.20 1.45 7.65 15.3 $51,300
1995 5.26 .94 6.20 1.45 7.65 15.3 $61,200 (OASDI); no limit (HI)
2000 5.30 .90 6.20 1.45 7.65 15.3 $76,200 (OASDI); no limit (HI)
2004 5.30 .90 6.20 1.45 7.65 15.3 $87,900 (OASDI); no limit (HI)
NOTE: Until 1991, the amount of maximum taxable earnings was the same for OASDI and HI. In 1992,
the amount of maximum taxable earnings for HI was raised to $125,000. In 1993, it was raised to $135,000.
For 1994 and thereafter, the HI tax is levied on all earnings. Tax credits were provided to the self-employed
for the period from 1984 through 1989. For 1990 and later, only 92.35% of net self-employment earnings
is taxable and half of the SECA taxes so computed is deductible for federal income tax purposes.
This report was written by former CRS analyst Geoffrey Kollmann.
Congressional Research Service ** The Library of Congress](ViewImageLocal?handle=hein.tera/crstax0365&div=1&collection=&method=preview&ext=.png&size=3)
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