What Is FICA Tax? Social Security & Medicare Explained

Open your pay stub and you'll see it: "Social Security" and "Medicare" each taking a slice of your paycheck before you see a dollar. Together, these are FICA taxes. Most workers pay them every pay period without fully understanding what they are or where the money goes.

What Does FICA Stand For?

FICA stands for the Federal Insurance Contributions Act. It's a federal law that requires employers to withhold two separate taxes from employee wages: Social Security and Medicare. These are not income taxes — they fund specific programs, and the rate is the same regardless of your filing status or deductions.

Social Security Tax: 6.2%

The Social Security portion is 6.2% of your gross wages, up to an annual wage cap. In 2026, that cap — called the Social Security wage base — is $176,100.

Once your total wages for the year reach $176,100, you stop paying Social Security tax on additional earnings for that calendar year. If you earn $200,000, you pay Social Security on the first $176,100 ($10,918.20) and nothing on the remaining $23,900.

Your employer pays a matching 6.2% on your behalf. Self-employed individuals pay both the employee and employer portions — a combined 12.4% — through self-employment tax, though they can deduct half of it.

The money funds the Social Security program, which provides retirement income, disability benefits, and survivor benefits to qualifying workers and their families.

Medicare Tax: 1.45% (Plus a Surcharge for High Earners)

Medicare tax is 1.45% on all wages. Unlike Social Security, there is no wage cap — you pay 1.45% on every dollar of earned income.

There is also an Additional Medicare Tax of 0.9% on wages above $200,000 for single filers (or $250,000 for married filing jointly). This surcharge is only withheld by employers once your wages with that employer exceed $200,000 in a calendar year. If you have multiple jobs and combined wages exceed the threshold, you may owe additional Medicare tax when you file your return.

Your employer also pays a matching 1.45% Medicare tax. The Additional Medicare Tax is not matched by employers — it's purely on the employee side.

Total FICA Cost for Most Workers

For most employees:

• Social Security: 6.2%
• Medicare: 1.45%
• Total FICA: 7.65% of gross wages

On a $60,000 salary, that's $4,590 per year in FICA taxes — $382.50 per month. This comes out before federal and state income tax is applied.

FICA vs. Income Tax: Key Differences

Many people confuse FICA with income tax. They're different in important ways:

• FICA is a flat rate (no brackets, no deductions). Everyone pays 7.65% regardless of how much they earn, up to the Social Security cap.
• Federal income tax is progressive — higher earners pay higher rates on upper portions of income, and deductions and credits reduce the amount owed.
• FICA funds specific programs (Social Security and Medicare). Income taxes go to the general federal budget.
• Pre-tax 401(k) contributions reduce income tax but do NOT reduce FICA taxes. You still pay 7.65% on your full gross wages, regardless of retirement contributions.

FICA for Self-Employed Workers

If you're self-employed, you pay self-employment tax instead of FICA. The rate is effectively double: 12.4% for Social Security and 2.9% for Medicare, for a combined 15.3% on net self-employment income. This is because you're covering both the employee and employer shares.

The deduction helps offset this: self-employed individuals can deduct half of their self-employment tax from their gross income when calculating regular income tax — not from the self-employment tax itself, but it reduces the income that's subject to income tax.

Will You Get the Money Back?

FICA taxes fund future benefits, but there's no direct one-to-one relationship between what you pay in and what you receive. Social Security benefits are based on your 35 highest-earning years of work history. Medicare provides health coverage at age 65 regardless of the exact amount you contributed.

Whether you "get your money back" depends on your health, longevity, and when you claim benefits. The system is designed as social insurance, not a personal savings account.

How to Estimate Your FICA Taxes

Multiply your gross annual salary by 7.65% for a quick estimate. For higher earners, Social Security is capped at $176,100 × 6.2% = $10,918.20, and Medicare continues at 1.45% on everything above that (with the 0.9% surcharge above $200,000).

Our take-home pay calculator computes FICA taxes automatically alongside federal and state income taxes, so you can see the full picture of what comes out of your paycheck.