Social Security

For 2018, the tax rate on the employee portion of Social Security is 6.2% on wages up to $128,400, so Social Security tax withholdings should not exceed $7,960.80. Medicare tax of 1.45% is withheld from all wages regardless of amount. On Schedule SE for 2018, self-employment tax of 15.3% applies to earnings of up to $128,400 after the earnings are reduced by 7.65%. The 15.3% rate equals 12.4% for Social Security (6.2% employee share and 6.2% employer share) plus 2.9% for Medicare. If net earnings exceed $128,400, the 2.9% Medicare rate applies to the entire amount. One half of the self-employment tax may be claimed as an above-the-line deduction on Schedule 1 of Form 1040.