26 CFR 31.3201-2 - Rates and computation of employee tax.

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§ 31.3201-2 Rates and computation of employee tax.
(a) Rates—
(1)
(i) Tier 1 tax. The Tier 1 employee tax rate equals the sum of the tax rates in effect under section 3101(a), relating to old-age, survivors, and disability insurance, and section 3101(b), relating to hospital insurance. The Tier 1 employee tax rate is applied to compensation up to the contribution base described in section 3231(e)(2)(B)(i). The contribution base is determined under section 230 of the Social Security Act and is identical to the old-age, survivors, and disability insurance wage base and the hospital insurance wage base, respectively, under the Federal Insurance Contributions Act.
(ii) Example. The rule in paragraph (a)(1)(i) of this section is illustrated by the following example.
Example.
A received compensation of $60,000 in 1992. The section 3101(a) rate of 6.2 percent would be applied to A's compensation up to $55,500, the applicable contribution base for 1992. The section 3101(b) rate of 1.45 percent would be applied to the entire $60,000 of A's compensation because the applicable contribution base for 1992 is $130,200.
(2)
(i) Tier 2 tax. The Tier 2 employee tax rate equals the percentage set forth in section 3201(b) of the Code. This rate is applied to compensation up to the contribution base described in section 3231(e)(2)(B)(ii).
(ii) Example. The rule in paragraph (a)(2)(i) of this section is illustrated by the following example.
Example.
A received compensation of $60,000 in 1992. The section 3201(b) rate of 4.90 percent would be applied to A's compensation up to $41,400, the applicable contribution base for 1992.
(b)
(1) Computation. The employee tax is computed by multiplying the amount of the employee's compensation with respect to which the employee tax is imposed by the rate applicable to such compensation, as determined under paragraph (a) of this section. The applicable rate is the rate in effect when the compensation is received by the employee. For rules relating to the time of receipt, see § 31.3121(a)-2 (a) and (b).
(2) Example. The rule in paragraph (b)(1) of this section is illustrated by the following example.
Example.
In 1990, employee A received compensation of $1,000 as remuneration for services performed for employer R in 1989. The employee tax is payable at the rate of 12.55 percent (7.65 percent plus 4.90 percent) in effect for 1990 (the year the compensation was received), and not the 12.41 percent rate (7.51 percent plus 4.90 percent) in effect for 1989 (the year the services were performed).
[T.D. 8582, 59 FR 66189, Dec. 23, 1994]

Title 26 published on 2013-04-01

The following are only the Rules published in the Federal Register after the published date of Title 26.

For a complete list of all Rules, Proposed Rules, and Notices view the Rulemaking tab.

  • 2014-09-16; vol. 79 # 179 - Tuesday, September 16, 2014
    1. 79 FR 55362 - Authority for Voluntary Withholding on Other Payments
      GPO FDSys XML | Text
      DEPARTMENT OF THE TREASURY, Internal Revenue Service
      Final regulations and removal of temporary regulations.
      Effective Date: These regulations are effective on September 16, 2014. Applicability Date: For date of applicability, see § 31.3402(p)-1(d).
      26 CFR Part 31

Title 26 published on 2013-04-01

The following are ALL rules, proposed rules, and notices (chronologically) published in the Federal Register relating to 26 CFR 31 after this date.

  • 2014-09-16; vol. 79 # 179 - Tuesday, September 16, 2014
    1. 79 FR 55362 - Authority for Voluntary Withholding on Other Payments
      GPO FDSys XML | Text
      DEPARTMENT OF THE TREASURY, Internal Revenue Service
      Final regulations and removal of temporary regulations.
      Effective Date: These regulations are effective on September 16, 2014. Applicability Date: For date of applicability, see § 31.3402(p)-1(d).
      26 CFR Part 31