Throughout the history of the United States, the Federal Insurance Contributions Act (FICA) has played a significant role in shaping the country’s social security and healthcare landscape. Let’s take a journey through time and explore the evolution of FICA tax rates.
In 1935, FICA was introduced as a means to provide a safety net for American workers. The initial Social Security tax rate was set at 1% on the first $3,000 of income. Over the years, the tax rates have seen various adjustments to keep up with economic changes and the growing needs of the population.
Fast forward to 1990 when the FICA tax rates began to stabilize. During that period, the Social Security tax rate stood at 6.2% on the first $53,400 of income, gradually increasing to 6.2% on the first $127,200 by 2017. The intent was to ensure a sustainable funding source for the Social Security program, which provides retirement benefits to millions of Americans.
Medicare, another important component of FICA, has maintained a consistent tax rate of 1.45% on all income during most of the observed period. However, in 2013, an additional 0.9% tax was introduced on earnings exceeding $200,000 to support the growing healthcare needs of the aging population.
For self-employed individuals, the self-employment tax encompassed both the employer and employee portions of Social Security and Medicare. This meant that self-employed individuals were responsible for the full 15.3% tax rate on the first $127,200 of income, with adjusted rates for higher income brackets.
FICA Tax Rates 1991 To 2017
It is worth noting that these tax rates have undergone gradual changes over time to adapt to economic conditions and ensure the sustainability of social security and healthcare programs. Staying informed about the most recent tax regulations is crucial for understanding and complying with the current FICA tax obligations.
FICA continues to be a cornerstone of the American social safety net, providing vital support to retired individuals, disabled individuals, and those in need of healthcare services. As we move forward, FICA will likely continue to evolve, reflecting the changing demographics and needs of the American population.
FICA Tax Rates 1951 To 1990
| Year | FICA | Self-Employment |
|---|---|---|
| 1990 | 7.65% on first $51,300 | 15.3% on first $51,300 |
| 1989 | 7.51% on first $48,000 | 13.02% on first $48,000 |
| 1988 | 7.51% on first $45,000 | 13.02% on first $45,000 |
| 1987 | 7.15% on first $43,800 | 12.3% on first $43,800 |
| 1986 | 7.15% on first $42,000 | 12.3% on first $42,000 |
| 1985 | 7.05% on first $39,600 | 11.8% on first $39,600 |
| 1984 | 6.7% on first $37,800 | 11.3% on first $37,800 |
| 1983 | 6.7% on first $35,700 | 9.35% on first $35,700 |
| 1982 | 6.7% on first $32,400 | 9.35% on first $32,400 |
| 1981 | 6.65% on first $29,700 | 9.3% on first $29,700 |
| 1980 | 6.13% on first $25,900 | 8.1% on first $25,900 |
| 1979 | 6.13% on first $22,900 | 8.1% on first $22,900 |
| 1978 | 6.05% on first $17,700 | 8.1% on first $17,700 |
| 1977 | 5.85% on first $16,500 | 7.9% on first $16,500 |
| 1976 | 5.85% on first $15,300 | 7.9% on first $15,300 |
| 1975 | 5.85% on first $14,100 | 7.9% on first $14,100 |
| 1974 | 5.85% on first $13,200 | 7.9% on first $13,200 |
| 1973 | 5.85% on first $10,800 | 8% on first $10,800 |
| 1972 | 5.2% on first $9,000 | 7.5% on first $9,000 |
| 1971 | 5.2% on first $7,800 | 7.5% on first $7,800 |
| 1969-1970 | 4.8% on first $7,800 | 6.9% on first $7,800 |
| 1968 | 4.4% on first $7,800 | 6.4% on first $7,800 |
| 1967 | 4.4% on first $6,600 | 6.4% on first $6,600 |
| 1966 | 4.2% on first $6,600 | 6.15% on first $6,600 |
| 1963-1965 | 3.625% on first $4,800 | 5.4% on first $4,800 |
| 1962 | 3.125% on first $4,800 | 4.7% on first $4,800 |
| 1960-1961 | 3% on first $4,800 | 4.5% on first $4,800 |
| 1959 | 2.5% on first $4,800 | 3.75% on first $4,800 |
| 1957-1958 | 2.25% on first $4,200 | 3.375% on first $4,200 |
| 1955-1956 | 2% on first $4,200 | 3% on first $4,200 |
| 1954 | 2% on first $3,600 | 3% on first $3,600 |
| 1951-1953 | 1.5% on first $3,600 | 2.25% on first $3,600 |
