FICA tax calculation with wage cap

EHC

New Member
Joined
Jul 26, 2010
Messages
2
Good afternoon,

First time poster and would appreciate some guidance on this topic.

I have to calculate the FICA tax liability for an institution. I have the salary information for all the employees. I need to figure this out on a monthly basis. The issue is that FICA is calculated using two separate rates. The first $106,800 is taxed at 7.65% and the remaining income is taxed at 1.45%. So just for illustration purpose, lets say the person makes $50,000 per month.

The first two months of income will be taxed at 7.65% but then in the third month, some of the income (up to $106,800 cumulatively) will be taxed at 7.65% and the remainder of the income in the third month (and going forward since they hit the $106,800 cap) will be taxed at 1.45%.

Is there a way to set up a formula for this? My issue, in this illustration, is that in the third month i can either tax it at one of the two rates and not a portion of the income at one rate and the other portion at the other rate.

Thanks!
 

Some videos you may like

Excel Facts

When did Power Query debut in Excel?
Although it was an add-in in Excel 2010 & Excel 2013, Power Query became a part of Excel in 2016, in Data, Get & Transform Data.

dave3009

Well-known Member
Joined
Jun 23, 2006
Messages
7,002
Office Version
365, 2016
Hi and Welcome

Something like this?
Excel Workbook
ABC
1MonthPaymentTax
21500003825
32500007650
43500008796.6
54500009521.6
Sheet3
Excel 2007
Cell Formulas
RangeFormula
C2=IF(SUM($B$2:B2)<106800, SUM($B$2:B2)*0.0765, (106800*0.0765)+(SUM($B$2:B2)-106800)*0.0145)
 

JoeMo

MrExcel MVP
Joined
May 26, 2009
Messages
17,116
Office Version
365, 2010
Platform
Windows

EHC

New Member
Joined
Jul 26, 2010
Messages
2
Thanks for the help guys. JoeMo, i think you showed what i'm looking for. I'm going to give it a try, but it looks good. Thanks to both of you!
 

Subscribe on YouTube

Watch MrExcel Video

Forum statistics

Threads
1,106,925
Messages
5,514,200
Members
408,990
Latest member
fresse68

This Week's Hot Topics

  • Sort code advice please
    Hi, I have the code below which im trying to edit but getting a little stuck. This was the original code which worked fine,columns A-F would sort...
  • SUMPRODUCT with nested If statement
    Hi everyone, Hope you're all well. I'm hoping someone will be able to point me in the right direction with a problem I'm having with a SUMPRODUCT...
  • VBA - simple sort is killing me!
    Hello all! This should be so easy, but not for me, apparently! I have a table of data that can be of varying lengths and widths. My current macro...
  • Compare Two Lists
    I have two Lists and I need to be able to Identify differences between them. List 100 comes from a workbook - the other is downloaded form the...
  • Formula that deducts points for each code I input.
    I am trying to create a formula that will have each student in my class start at 100 points and then for each code that I enter (PP for Poor...
  • Conditional formatting formula required for day of week and a value
    Hi, I have a really simple spreadsheet where column A is the date, column B is the activity total shown as a number and column C states the day of...
Top