When taking into account how much Federal/State income taxes, FICA and MED have to be removed from your income, do you calculate that based off of your Gross or AGI?


For Federal, it's the taxable income as answered in How to base my income tax bracket?

State has a similar process, but each state is different. e.g. some states do not honor IRA deductions, and some states permit a deduction for the 529 college savings account which Federal does not.

FICA and Med come off the very top of income with a couple exceptions - FICA has an income limit, in 2012, it's withheld only up to $110,100 of income. And - I believe certain deductions such as FSA (The "Flexible savings account" for medical expenses) may be pre-FICA deductions.

Edit - in case my wording was ambiguous - With the small exception of the FSA deduction, FICA/Med is calculated on one's gross income. FICA/Med does not reduce one's taxable income for Federal or state income tax.

  • Maybe I misunderstood something in your answer, but generally FICA taxes do not reduce the taxable income for income tax purposes. Federal taxes based on income are not deductible for the purpose of income tax calculations (State and foreign taxes are). – littleadv Nov 26 '12 at 23:37
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    I meant FICA is taken off of nearly-gross income, federal does not take a deduction for FICA. So that money is taxed twice. – JTP - Apologise to Monica Nov 26 '12 at 23:47

Federal income tax is based on adjusted income (post-tax-exempt-deductions). State income taxes vary by state. Social Security is based on gross income, but has a ceiling (in the low 6 figures) above which no additional taxes are withheld, while Medicare taxes are a flat tax with no ceiling.

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