An individual's Social Security is taxed at what rate?

The taxation of an individual's Social Security is administered through the Federal Insurance Contributions Act (FICA), which pertains to payroll taxes imposed on employees and employers. The rate associated with Social Security tax is indeed 6.2% on earnings up to a certain income limit, which is adjusted annually.

This rate applies to wages, salaries, and other forms of compensation, contributing to Social Security programs that provide benefits to retirees, disabled individuals, and dependents of deceased workers. Understanding this rate is crucial for both contractors and employees, as it influences calculations related to payroll and budgeting.

The other rates presented in the choices relate to different aspects of payroll taxation. The rate of 1.45% corresponds to the Medicare tax, which is another part of FICA but specifically designated for funding Medicare. The figure of 7.65% represents the combined total of both Social Security and Medicare taxes applied to employee wages (6.2% for Social Security plus 1.45% for Medicare). Lastly, the rate of 15.3% is the combined tax rate for self-employment, which includes both the employee and employer portions of Social Security and Medicare.