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2006 Social Security and Medicare Tax Withholding

For 2006, the maximum limit on earnings for withholding in the Old-Age, Survivors, and Disability (OASDI) portion of the Social Security tax increases from $90,000 to $94,200. This is a $4,200 increase from the 2005 limit. The Social Security tax rate remains at 6.2 percent, resulting in a maximum Social Security tax of $5,840.40. This is a $260.40 increase from the 2005 limit of $5,580.00. There is still no limit on the amount of earnings subject to the Medicare portion of the tax rate.

The Medicare tax rate applies to all taxable wages, and remains at 1.45 percent. The Federal Insurance Contribution Act (FICA) tax rate, which is the combined Social Security tax rate of 6.2 percent and the Medicare tax rate of 1.45 percent, remains at 7.65 percent for 2006.

The information in the following table is effective January 1, 2006.

Tax Withholding 2005 2006
Social Security Gross Limit $90,000.00 $94,200.00
Social Security Liability Limit $5,580.00 $5,840.40
Medicare Gross Limit No Limit No Limit
Medicare Liability Limit No Limit No Limit

— Payroll,
Finance, 10-27-05