Virginia Contractor General Practice Exam Prep – Practice Test & Study Guide

The total FICA tax rate is composed of two parts: Social Security and Medicare taxes. As of the latest information, the Social Security tax rate is 6.2% and is applied to wages up to a certain limit (the wage base limit), while the Medicare tax rate is 1.45%, which applies to all earnings without a cap.

When you add these two rates together, you arrive at a total FICA tax rate of 7.65%. This total encompasses the mandatory contributions made by both employees and employers, each of whom pays 6.2% for Social Security and 1.45% for Medicare. This makes the total matched contribution for employers the same rate as that for employees.

Other options presented do not reflect the current total FICA tax rate structure, which serves to ensure workers contribute to their Social Security and Medicare benefits. Understanding the components of this tax is essential for both compliance and financial planning for contractors.