- Employees and employers each pay Social Security and Medicare taxes equal to 7.65 percent of an employee's wages. The tax rate does not change in 2019. The 7.65 percent tax rate is comprised of two components: (1) a Medicare hospital insurance tax of 1.45 percent, and (2) an “old‑age, survivor and disability” (Social Security) tax of 6.2 percent. There is no maximum amount of wages subject to the Medicare tax. The tax is imposed on all wages regardless of amount. For 2019, the maximum wages subject to Social Security taxes (the 6.2 percent amount) is $132,900. Stated differently, employees who receive wages in excess of $132,900 in 2019 pay the full 7.65 percent tax rate for wages up to $132,900, and the Medicare tax rate of 1.45 percent on all earnings above $132,900. Employers pay an identical amount. The Medicare tax rate for certain high-income taxpayers increases by an additional 0.9 percent.
- The self‑employment tax rate (15.3 percent) does not change in 2019. The 15.3 percent tax rate consists of two components: (1) a Medicare hospital insurance tax of 2.9 percent, and (2) an old-age, survivor and disability (Social Security) tax of 12.4 percent. There is no maximum amount of self‑employment earnings subject to the Medicare tax. The tax is imposed on all net earnings regardless of amount. For 2019, the maximum earnings subject to the Social Security portion of self‑employment taxes (the 12.4 percent amount) is $132,900. Stated differently, persons who receive compensation in excess of $132,900 in 2019 pay the combined 15.3 percent tax rate for net self‑employment earnings up to $132,900, and only the Medicare tax rate of 2.9 percent on earnings above $132,900. These rules directly impact ministers, who are considered self‑employed for Social Security with respect to their ministerial services. Ministers should take these rules into account in computing their quarterly estimated tax payments. The Medicare tax rate for certain high-income taxpayers increases by an additional 0.9 percent.
- Beginning on this date, churches having nonminister employees (or a minister who has elected voluntary withholding) should begin withholding federal income taxes according to the new tables and instructions contained in the 2019 edition of IRS Publication 15 ("Circular E"). Every church having nonminister employees should contact the IRS to obtain the 2019 edition of this important publication. You can order a copy by calling the IRS forms hotline at 1-800-829-3676. It also is available on the IRS website (IRS.gov).
Note: If a date listed for filing a return or making a tax payment falls on a Saturday, Sunday, or legal holiday (either national or statewide in a state where the return is required to be filed), the return or tax payment is due on the following business day.
Note: You must use electronic funds transfer to make all federal employment tax deposits. This is generally done using the Electronic Federal Tax Payment System, a free service provided by the U.S. Department of Treasury. If you don't wish to use EFTPS, you can arrange for your tax professional, financial institution, or payroll service to make deposits on your behalf. Failure to make a timely deposit may subject you to a 10-percent penalty.
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