IRS News Release  
December 20, 1990

State, Local Governments Under
New Social Security & Medicare Taxes

WASHINGTON - Soon over two million state and local government employees not currently covered by a retirement system will be subject to social security and medicare taxes. This means that state and local government employers will be subject to the employer's matching portion of social security and medicare tax. The social security tax is 6.2 percent on wages up to $53,400. The medicare tax is 1.45 percent on wages up to $125,000. This provision applies to wages paid for services performed after July 1, 1991.

Certain exceptions apply to this provision. Employees who work for the District of Columbia, Guam and American Samoa are not subject to the taxes. Neither are payments to employees hired temporarily to handle disaster emergencies. Election officials and workers paid less than $100, persons hired through programs to relieve unemployment such as summer youth programs, and individuals paid for services performed in a hospital, home or other institution where they are a patient or inmate also are not subject to the taxes.


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