FICA
Federal Insurance Contributions Act taxes that fund Social Security (6.2%) and Medicare (1.45%). Both employees and employers pay FICA, totaling 15.3% on wages.
FICA stands for the Federal Insurance Contributions Act. It is the payroll tax that funds two federal programs: Social Security (officially Old-Age, Survivors, and Disability Insurance) and Medicare (Hospital Insurance). FICA is separate from federal income tax.
For employees, FICA is split between the worker and employer. Each side pays 6.2% for Social Security (on wages up to the wage base of $176,100 in 2025) and 1.45% for Medicare (on all wages, with no cap). The combined employee share is 7.65%.
Self-employed individuals pay both the employee and employer portions, totaling 15.3%, through self-employment tax. However, they can deduct the employer-equivalent half (7.65%) as an above-the-line deduction on their income tax return, partially offsetting the extra cost.
How it works
FICA, short for the Federal Insurance Contributions Act, is the payroll tax that funds Social Security and Medicare, separate entirely from federal income tax. It has two components: Social Security tax at 6.2% and Medicare tax at 1.45%, both charged on wages and both split between employee and employer. Social Security tax only applies up to the annual wage base ($176,100 in 2025); Medicare tax has no wage cap at all and applies to every dollar of wages earned.
You see FICA taken out of every paycheck, shown separately from federal income tax withholding in Boxes 3 through 6 of your W-2, which report your Social Security and Medicare wages and the tax withheld on each. The combined employee share is 7.65% (6.2% + 1.45%), matched dollar-for-dollar by your employer, so the government actually collects 15.3% total on FICA-covered wages up to the Social Security wage base, and 2.9% on wages above it (Medicare only).
Self-employed individuals do not have an employer to split the cost with, so they pay both halves — the full 15.3% — through self-employment tax rather than FICA withholding, though they get to deduct the employer-equivalent half (7.65%) as an above-the-line deduction on their income tax return, which partially offsets the extra burden. Anyone working multiple jobs in a year should also watch for excess Social Security withholding if their combined wages across employers exceed the wage base, since each employer withholds independently without knowing about the others.
Example: FICA on a $90,000 salary
An employee earns $90,000 in wages for 2025, which is below the $176,100 Social Security wage base, so the full amount is subject to both parts of FICA.
Social Security tax takes 6.2% of $90,000, or $5,580, and Medicare tax takes 1.45%, or $1,305, for total employee FICA of $6,885. The employer matches that same amount separately, so $13,770 in total FICA tax is paid into the system on this employee's wages.
Frequently asked questions
What is FICA tax and how is it different from income tax?
Do I stop paying FICA once I earn enough?
Why do self-employed people pay more in FICA-equivalent tax?
Related Terms
Social Security Tax
A 6.2% payroll tax on wages up to the annual wage base ($176,100 in 2025), matched by your employer. Funds Social Security retirement, disability, and survivor benefits.
Medicare Tax
A 1.45% payroll tax on all wages with no income cap, matched by employers. High earners pay an Additional Medicare Tax of 0.9% on wages over $200,000 (single).
Self-Employment Tax
The combined Social Security (12.4%) and Medicare (2.9%) tax paid by self-employed individuals — effectively both the employee and employer shares of FICA, totaling 15.3%.
Wage Base
The maximum amount of earnings subject to Social Security tax in a given year. For 2025, the wage base is $176,100. Earnings above this amount are exempt from Social Security tax.