What Is FICA Tax?

FICA stands for the Federal Insurance Contributions Act, a 1935 law that created the payroll tax system funding Social Security and Medicare. Every time you see “FICA,” “SS/Med,” or “OASDI” on your pay stub, it refers to this same tax.

Unlike federal income tax, which varies based on your income, filing status, and deductions, FICA is a flat percentage of your gross wages — meaning nearly everyone pays the same rate, whether you earn $30,000 or $300,000 a year (with one important exception for high earners, covered below).

Key Facts About FICA

• Required by federal law for almost all employees, regardless of state
• Split into two parts: Social Security tax and Medicare tax
• Employee rate: 7.65% of gross wages (6.2% + 1.45%)
• Employer matches the same 7.65% on your behalf
• Separate from federal and state income tax withholding

The Two Parts of FICA

FICA is really two separate taxes bundled under one name. Understanding each piece explains why the total rate is 7.65% and why one part has a cap while the other doesn’t.

Social Security Tax

Formally called OASDI (Old-Age, Survivors, and Disability Insurance), this portion funds monthly benefits for retirees, people with qualifying disabilities, and the families of deceased workers. It’s the larger of the two FICA components at 6.2%.

Medicare Tax

This portion funds Medicare Part A, which covers hospital insurance for people 65 and older and some younger people with disabilities. At 1.45%, it’s smaller than the Social Security portion, but unlike Social Security, it applies to every dollar you earn with no upper limit.

How FICA Tax Is Calculated

FICA is calculated as a straightforward percentage of your gross wages for each pay period — no brackets, no deductions, no filing status involved.

FICA Withholding at Common Paycheck Amounts (2026)

The Social Security Wage Base Limit

Unlike Medicare, Social Security tax only applies up to a certain amount of annual earnings, called the wage base limit. This limit is adjusted every year to keep pace with national wage growth.

Once your year-to-date wages hit $184,500 in 2026, your employer stops withholding the 6.2% Social Security tax for the rest of the calendar year. This means the maximum Social Security tax any employee will pay in 2026 is $11,439 ($184,500 × 6.2%). Your take-home pay can actually increase slightly once you cross this threshold, since one of your two FICA deductions disappears.

Medicare tax, by contrast, has no wage base limit — it applies to 100% of your earnings no matter how high your income goes. Track your progress toward the Social Security cap using the YTD column on your pay stub.

The Additional Medicare Tax

While standard Medicare tax has no cap, high earners pay an extra 0.9% once their wages cross a threshold — on top of the standard 1.45%.

Employers are required to start withholding the Additional Medicare Tax once an employee’s wages from that employer exceed $200,000 in a calendar year — regardless of the employee’s actual filing status or household income. There is no employer match for this additional 0.9% portion; it’s paid entirely by the employee.

Why Your Employer Pays Too

FICA is a shared-cost tax. For every dollar withheld from your paycheck, your employer contributes a matching amount out of their own funds — it isn’t deducted from your pay.

This employer match is why FICA is sometimes described as a 15.3% total contribution — even though you only see 7.65% (or slightly more, if the Additional Medicare Tax applies) come out of your own check.

Example 1 — Typical Hourly Employee

Scenario: Devon earns $24/hour and works a standard 40-hour week, paid biweekly (80 hours per paycheck).

Step 1 — Calculate Gross Pay

Step 2 — Calculate FICA Withholding

Devon’s employer also contributes a matching $146.88 toward Social Security and Medicare — money that doesn’t come out of Devon’s paycheck but still counts toward his future benefits.

Example 2 — High Earner Hitting the Wage Base

Scenario: Priya earns a $210,000 annual salary, paid semimonthly (24 paychecks/year), so each gross paycheck is $8,750. She’s single and will cross both the Social Security wage base and the Additional Medicare Tax threshold during the year.

Early in the Year — Below Both Thresholds

Once YTD Wages Pass $184,500

Once YTD Wages Pass $200,000

Priya’s FICA withholding actually drops once she passes the Social Security wage base, then rises again once the Additional Medicare Tax kicks in — a pattern common among higher earners late in the calendar year. Track your own progress using the YTD figures on your pay stub.

FICA for Self-Employed Workers (SECA)

If you’re self-employed — a freelancer, independent contractor, or small business owner — you don’t have an employer to split FICA with. Instead, you pay a similar tax under the Self-Employment Contributions Act (SECA).

Essentially, self-employed workers pay both the “employee” and “employer” halves of FICA — 15.3% total on net self-employment earnings up to the Social Security wage base. The good news: half of the SECA tax is deductible when calculating adjusted gross income on your federal tax return, which partially offsets the higher rate.

Who Is Exempt From FICA Tax?

FICA applies to the vast majority of US workers, but a few narrow categories are exempt:

• Certain state and local government employees covered by an alternate retirement system
• Some nonresident aliens working in the US under specific visa categories (such as F-1 or J-1 students)
• Members of certain religious groups with an approved religious exemption
• Some student workers employed by the college or university they attend
• Children under 18 employed by a parent in a sole proprietorship, in limited circumstances

Where Does FICA Money Actually Go?

Unlike general income tax revenue, FICA contributions are earmarked specifically for Social Security and Medicare trust funds, and your contributions are tracked under your own Social Security number over your working lifetime.

Your Social Security contributions directly affect your future benefit amount — the Social Security Administration calculates your eventual retirement benefit based on your highest-earning working years, which is why consistent FICA contributions matter over time.

FICA Tax Myths — Busted

FICA Tax — FAQs