FICA Taxes Explained
Understanding Social Security and Medicare withholdings from your paycheck
What is FICA?
FICA stands for the Federal Insurance Contributions Act. It's a payroll tax that funds two major federal insurance programs: Social Security and Medicare. FICA taxes are automatically withheld from your paycheck, and your employer also contributes an equal amount.
FICA Tax Rates for 2026
FICA taxes are split between two programs:
- Social Security Tax: 6.2% of wages
- Medicare Tax: 1.45% of wages
- Total FICA Rate: 7.65% of your gross income
These rates apply to all wages, with no income limit for Medicare tax. Social Security tax has a wage base limit of $168,600 for 2026.
Social Security Tax (6.2%)
Social Security is a retirement and disability insurance program. Here's what you should know:
- Rate: 6.2% of your gross wages
- Wage Base Limit: $168,600 (2026)
- Purpose: Funds retirement benefits, disability benefits, and survivor benefits
- Example: On a $60,000 salary, you pay $3,720 in Social Security tax
What this means: Once you earn $168,600, you stop paying Social Security tax for the remainder of the year. High earners don't pay Social Security tax on income above this cap.
Medicare Tax (1.45%)
Medicare is the federal health insurance program for people 65 and older. It also covers some younger people with disabilities:
- Rate: 1.45% of all wages (no limit)
- Purpose: Funds hospital insurance, medical insurance, and prescription drug coverage
- Additional Tax: High earners pay an additional 0.9% Medicare tax on wages over $200,000 (single) or $250,000 (married)
- Example: On a $60,000 salary, you pay $870 in Medicare tax
Employer Contribution
Your employer also pays FICA taxes on your behalf:
- Employer pays 6.2% Social Security tax
- Employer pays 1.45% Medicare tax
- Total employer contribution: 7.65%
- This is separate from what's withheld from your paycheck
Self-Employment Tax
If you're self-employed, you pay both the employee and employer portions of FICA taxes:
- Self-employed individuals pay 15.3% total (12.4% Social Security + 2.9% Medicare)
- You can deduct half of your self-employment tax
- This applies to net self-employment income of $400 or more
Example FICA Calculation
Scenario: Employee earning $75,000 annually
- Gross Annual Income: $75,000
- Social Security Tax (6.2%): $4,650
- Medicare Tax (1.45%): $1,087.50
- Total FICA Tax: $5,737.50
- Monthly FICA: $478.13
Key Takeaways
- FICA is an automatic payroll tax that funds Social Security and Medicare
- The combined rate is 7.65% of your gross wages
- Your employer contributes an equal amount
- High earners pay additional Medicare tax on wages over $200,000/$250,000
- Self-employed workers pay both employee and employer portions
- FICA taxes are part of your total tax burden along with federal income tax and state taxes
Calculate Your FICA Taxes
Want to see exactly how much FICA taxes you'll pay? Use our annual tax calculator to see the breakdown of your federal income tax, FICA taxes, and other deductions.