What are the two main components of FICA taxes?

FICA taxes are comprised of two primary components: Social Security tax and Medicare tax. These taxes are mandated by the Federal Insurance Contributions Act (FICA), which funds two significant social insurance programs in the United States.

Social Security tax is designed to provide benefits for retirees, disabled individuals, and survivors of deceased workers. It helps ensure that individuals have a safety net during their retirement years or in case of unexpected disabilities.

Medicare tax, on the other hand, funds the Medicare program, which offers health insurance to people aged 65 and over, as well as to certain younger people with disabilities and medical conditions. This program is crucial for providing healthcare services to older adults, making it vital for public health.

Other options listed are not relevant to FICA taxes. Income tax and sales tax operate under separate frameworks, where income tax is based on earnings, and sales tax is a consumption-based tax. State tax and local tax can include various types of taxes specific to jurisdiction but do not relate directly to the FICA framework. Lastly, property tax is imposed on real estate properties and is not a component of FICA taxes either. Overall, the correct answer highlights the two taxes that specifically fund essential social programs, embodying the core of FICA contributions