What is the current Social Security tax rate?

The Social Security tax rate is currently set at 6.2% for employees and employers, applying to wages up to a certain limit each year, which is known as the wage base limit. This rate is established by the Federal Insurance Contributions Act (FICA), which outlines how contributions for Social Security and Medicare are collected.

The significance of knowing the correct tax rate stems from its implications for both payroll calculations for businesses and individual financial planning for employees. Since this rate can affect take-home pay and the amount withheld from paychecks, it's crucial for contractors and businesses to keep track of it when managing payroll and complying with tax regulations.

While other options present different answers, they do not reflect the current established rate that impacts Social Security funding. As such, understanding and applying the correct rate is vital for legal and financial compliance in business practices.