Federal Insurance Contributions Act (“FICA”) imposes a tax on employers. The tax is comprised of two parts: (1) the old age, survivors, and disability insurance (“OASDI”) tax equal to 6.2 percent of covered wages up to the taxable wage base of $106,800 (for 2011) ; and (2) the Medicare hospital insurance (“HI”) tax amount equal to 1.45 percent of covered wages.
In addition to the tax on employers, each employee is subject to FICA taxes equal to the amount of tax imposed on the employer. The employee tax generally must be withheld and remitted to the Federal government by the employer.
For the year 2011, the FICA tax rate for employees was reduced by two percentage points. Specifically, the employer OASDI rate remains at 6.2 percent of covered wages while the employee rate is reduced to 4.2 percent of covered wages.