2012 Social Security and Medicare Tax Withholding Limits

On February 22, 2012, President Barack Obama signed legislation extending a 2 percent payroll tax cut for employ­ees continuing the reduction of the Social Security with­holding rate from 6.2 percent to 4.2 percent of wages paid through December 31, 2012. This reduced rate, originally in effect for all of 2011, had been temporarily extended through February 29, 2012, by legislation enacted on December 23, 2011. For 2012, the maximum limit on earn­ings for withholding of Social Security (Old-Age, Survivors, and Disability Insurance) tax is $110,100.00, as previously announced. The maximum limit is changed from last year. With the Social Security tax rate temporarily set at 4.2 per­cent, the resulting maximum Social Security tax for 2012 is $4,624.20.

There is still no limit on the amount of earnings subject to Medicare (Hospital Insurance) tax. The Medicare tax rate applies to all taxable wages and remains at 1.45 percent. The FICA tax rate, which is the combined Social Security rate of 4.2 percent and the Medicare rate of 1.45 percent, will temporarily remain at 5.65 percent for 2012.

The information in the following table shows the changes in Social Security and Medicare withholding limits from 2011 to 2012. The new limits became effective Janu­ary 1, 2012.



2011 Limit

2012 Limit

Social Security Gross



Social Security Liability



Medicare Gross

No Limit

No Limit

Medicare Liability

No Limit

No Limit