FICA stands for the Federal Insurance Contributions Act, the federal payroll tax that funds Social Security and Medicare. If you’re a W-2 employee, 7.65% of your covered wages comes out of each paycheck for FICA, and your employer pays a matching 7.65%, so 15.3% total is going to these two programs on your behalf. That 7.65% is split into 6.2% for Social Security (on earnings up to $184,500 in 2026) and 1.45% for Medicare (on all your earnings, no cap).
The Two Taxes Inside FICA
FICA is really two taxes collected together. The Social Security portion, formally the Old-Age, Survivors, and Disability Insurance tax, funds retirement benefits, disability payments, and survivor benefits.1Social Security Administration. Annual Statistical Supplement, 2020 – Social Security (Old-Age, Survivors, and Disability Insurance) Program Description and Legislative History The Medicare portion, formally the Hospital Insurance tax, funds Medicare, which covers people 65 and older, some younger people with disabilities, and people with end-stage renal disease.2Medicare.gov. End-Stage Renal Disease (ESRD) Both live in Chapter 21 of the Internal Revenue Code.3Office of the Law Revision Counsel. 26 USC Ch. 21 Federal Insurance Contributions Act
How Much FICA You Actually Pay
Social Security: 6.2% Up to a Cap
The Social Security piece is 6.2% of your wages, but only up to an annual wage base limit. For 2026, that limit is $184,500.4Social Security Administration. Contribution and Benefit Base Every dollar above $184,500 escapes Social Security tax. The most any employee can owe in Social Security tax in 2026 is $11,439. The cap moves up most years with average wage growth.
Medicare: 1.45% on Everything, Plus a Surtax for High Earners
Medicare tax runs 1.45% on all your covered wages with no upper limit.1Social Security Administration. Annual Statistical Supplement, 2020 – Social Security (Old-Age, Survivors, and Disability Insurance) Program Description and Legislative History Someone earning $500,000 pays 1.45% on the full amount.
On top of that, higher earners owe an Additional Medicare Tax of 0.9% on earned income above certain thresholds, which are not adjusted for inflation:5IRS. Instructions for Form 8959
- Single or head of household: 0.9% on earnings above $200,000
- Married filing jointly: 0.9% on combined earnings above $250,000
- Married filing separately: 0.9% on earnings above $125,000
Above the threshold, your effective Medicare rate is 2.35%. Your employer is required to start withholding the extra 0.9% once your wages from that job cross $200,000 in a calendar year, regardless of your filing status.5IRS. Instructions for Form 8959 That creates a common surprise for married couples. If each spouse earns $180,000, neither employer withholds the surtax, but the couple owes 0.9% on $110,000 of combined earnings (the amount above the $250,000 joint threshold). The balance gets settled on Form 8959 with the tax return.
What Counts as FICA Wages
FICA applies to “wages,” defined broadly to include pay for work, bonuses, commissions, and the cash value of non-cash compensation.6Office of the Law Revision Counsel. 26 U.S. Code 3121 – Definitions But several pre-tax deductions on your paycheck are stripped out before FICA is calculated.
Contributions through a Section 125 cafeteria plan, such as health insurance premiums or flexible spending account contributions, are generally excluded from FICA wages.7Internal Revenue Service. FAQs for Government Entities Regarding Cafeteria Plans Traditional 401(k) contributions are a different story. They dodge federal income tax but stay subject to FICA. Defer $5,000 to a 401(k) on an $80,000 salary and you still pay FICA on the full $80,000.
Two cafeteria plan items remain FICA-taxable despite the general exclusion: employer-provided group-term life insurance coverage above $50,000, and adoption assistance benefits.7Internal Revenue Service. FAQs for Government Entities Regarding Cafeteria Plans
Tips count too. Your employer withholds FICA on tips you report, but tips you don’t report to your employer get taxed when you file your return using Form 4137.8Internal Revenue Service. About Form 4137, Social Security and Medicare Tax On Unreported Tip Income
The Employer Match and Your W-2
Your employer’s 7.65% match is not withheld from your pay. It comes out of the company’s own money on top of your wages. Combined, that’s 12.4% for Social Security (capped at the wage base) and 2.9% for Medicare (uncapped) landing in the two trust funds.3Office of the Law Revision Counsel. 26 USC Ch. 21 Federal Insurance Contributions Act
The one thing your employer doesn’t match is the 0.9% Additional Medicare Tax. That surtax falls entirely on the employee.5IRS. Instructions for Form 8959
At year end, your W-2 shows the totals: Boxes 3 and 4 for Social Security wages and tax withheld, Boxes 5 and 6 for Medicare wages and tax withheld.9Internal Revenue Service. General Instructions for Forms W-2 and W-3 (2026) – Section: Specific Instructions for Form W-2 Comparing those boxes to your year-to-date pay stubs is the fastest way to spot a withholding error.
If You’re Self-Employed
When you work for yourself, there’s no employer to split the tab with. Under the Self-Employment Contributions Act, you pay both halves: 12.4% for Social Security and 2.9% for Medicare, for a combined 15.3%.10Office of the Law Revision Counsel. 26 U.S. Code 1401 – Rate of Tax The Social Security portion still stops at the $184,500 wage base for 2026; the Medicare portion has no cap. The 0.9% Additional Medicare Tax applies at the same filing-status thresholds W-2 workers face.5IRS. Instructions for Form 8959
Two features soften the blow. First, self-employment tax is calculated on 92.35% of your net self-employment income, not 100%, to mirror the way W-2 workers avoid FICA on the employer’s share. Second, you can deduct half of your self-employment tax when figuring adjusted gross income, whether or not you itemize.
Because nothing is being withheld, you’re generally required to pay quarterly estimated taxes if you expect to owe $1,000 or more at filing.11Internal Revenue Service. Estimated Taxes For 2026 calendar-year filers, payments are due April 15, June 15, and September 15 of 2026, and January 15 of 2027.12Internal Revenue Service. Publication 509 (2026), Tax Calendars
Who Doesn’t Pay FICA
Almost every worker pays FICA. The exemptions are narrow.
Students enrolled at least half-time who work for their own college or university may qualify for the student FICA exception, provided the job is incidental to their studies. Students treated as “professional employees,” meaning they receive benefits like retirement plan eligibility, vacation, or sick leave, don’t qualify.13Internal Revenue Service. Student FICA Exception
Nonresident aliens on F-1, J-1, or M-1 visas are generally exempt from FICA on qualifying employment during their first five calendar years in the United States. Once they pass the substantial presence test as resident aliens, the exemption ends.14Internal Revenue Service. Foreign Student Liability for Social Security and Medicare Taxes
Members of certain religious groups that have existed continuously since December 31, 1950, and that are conscientiously opposed to insurance benefits can apply on Form 4029, but approval means permanently waiving Social Security and Medicare benefits.15Internal Revenue Service. Form 4029, Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits
Getting Back Excess Social Security Tax
If you worked for two or more employers in 2026 and your combined wages topped $184,500, each employer withheld 6.2% on its own, unaware of the other. You may have paid more Social Security tax than you owe. Claim the excess as a credit on your income tax return; the Form 1040 instructions walk through the math.16Internal Revenue Service. Topic No. 608, Excess Social Security and RRTA Tax Withheld On a joint return, each spouse figures the excess separately, because the wage base is per person. The IRS won’t refund it automatically. You have to claim it.