The Social Security tax and the Medicare tax combine to form the Federal Insurance Contributions Act, or FICA, tax. The Social Security tax is based on your gross pay, before any pretax deductions are taken, but only to a maximum amount of income each year. At the time of publication, the limit is $106,800, so for most employees, the Social Security tax applies to all earned income. Figuring out how much Social Security tax should be taken out of your pay helps prevent your employer from taking too much and assists you in budgeting.
Research the amount of the current employee portion of the Social Security tax as well as the earnings limit. According to the Social Security Administration website at the time of publication, the employee rate equals 4.2 percent, and the limit is $106,800. However, the rate is likely to increase, so check the SSA website for the current rate.
Add your gross pay for the current pay period to your prior gross pay for the year. For example, if your paycheck is $6,000 and you had already earned $105,000, your total equals $111,000.
Subtract the annual income limit from the result to find the portion of your paycheck that is free from Social Security. If you get a negative number or zero, the Social Security tax applies to your entire paycheck. If you get a number between zero and your paycheck amount, part of your paycheck is subject to Social Security taxes. If the result is larger than your paycheck, you owe no Social Security taxes on the income. For the example, subtract $106,800 from $111,000 to get $4,200. Because $4,200 is larger than zero but smaller than your total paycheck amount, part of your paycheck is taxable.
Subtract the nontaxable portion from your total paycheck amount to find the portion to which the Social Security tax applies. In this example, subtract $4,200 from $6,000 to find you have to pay Social Security taxes on $1,200.
Multiply the taxable portion of your paycheck by the Social Security tax rate to calculate how much Social Security should be taken out of your pay. In this example, multiply $1,200 by 4.2 percent to find that $50.40 should be taken out of your pay for Social Security taxes.
Based in the Kansas City area, Mike specializes in personal finance and business topics. He has been writing since 2009 and has been published by "Quicken," "TurboTax," and "The Motley Fool."