FICA taxes are only partly deductible, and who gets the write-off depends on which side of the paycheck you’re on. Employees cannot deduct the Social Security and Medicare taxes withheld from their wages. Employers can deduct the matching share they pay as a business expense. Self-employed workers, who owe both halves, can deduct the employer-equivalent portion when figuring their adjusted gross income.
Why Employees Get No Deduction
The 6.2% Social Security tax and 1.45% Medicare tax withheld from each paycheck are not deductible on your personal return. That’s true whether you take the standard deduction or itemize. The federal tax code lists which taxes an individual can deduct — state and local income taxes, property taxes, and sales taxes — and FICA is not on the list.1Office of the Law Revision Counsel. 26 USC 164 – Taxes
Social Security and Medicare taxes are treated as personal contributions toward your own future benefits rather than expenses you incur to earn income. Every dollar withheld hits your bottom line with no offset on your 1040.
How Employers Deduct Their Share
Employers match every employee’s FICA contribution dollar for dollar, paying 6.2% for Social Security and 1.45% for Medicare on each worker’s wages.2Internal Revenue Service. Topic no. 751, Social Security and Medicare Withholding Rates The employer’s matching portion qualifies as a deductible business expense under the rule allowing deductions for ordinary and necessary costs of running a business.3Office of the Law Revision Counsel. 26 USC 162 – Trade or Business Expenses
The deduction applies whether the business files Form 1120 as a corporation, Form 1065 as a partnership, or reports employment costs on another return.4Internal Revenue Service. Instructions for Form 1120 (2025) – General Instructions The employer’s share of FICA sits alongside wages and other payroll costs, reducing taxable business income.
What employers cannot deduct is the employee’s share. Those withheld amounts belong to the worker and are already accounted for in wages, which the business does deduct. Treating both would double-count the same dollar.
How Self-Employed Workers Deduct Half of SE Tax
When you work for yourself, you pay both sides of FICA through self-employment tax: 12.4% for Social Security and 2.9% for Medicare, totaling 15.3%.5Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes) To keep the outcome roughly even with a traditional employee whose employer absorbs half the cost, the tax code lets you deduct the employer-equivalent portion. That deduction equals exactly half of your total self-employment tax for the year.1Office of the Law Revision Counsel. 26 USC 164 – Taxes
The starting point is your net profit from Schedule C. For 2026, the Social Security portion (12.4%) applies to the first $184,500 of net self-employment earnings.6Social Security Administration. Contribution and Benefit Base The Medicare portion (2.9%) applies to all net earnings with no cap. You calculate the total on Schedule SE, then take half as your deduction.7Internal Revenue Service. 2025 Instructions for Schedule SE (Form 1040)
The deductible half goes on Schedule 1, Part II, Line 15 of Form 1040. Because it sits in the adjustments-to-income section, it lowers your adjusted gross income directly. This is an above-the-line deduction, so you get it whether you itemize or take the standard deduction.8Internal Revenue Service. 2025 Schedule 1 (Form 1040) – Section: Part II
One knock-on effect worth knowing: if you qualify for the qualified business income deduction under Section 199A, the deductible half of your SE tax reduces your qualified business income for that calculation.9Internal Revenue Service. Qualified Business Income Deduction The SE tax deduction still saves you money, but your 20% QBI deduction will be slightly smaller than it would have been otherwise.
The Additional Medicare Tax Is Not Deductible
High earners pay an extra 0.9% Medicare tax once wages or self-employment income cross a threshold: $200,000 for single filers, $250,000 for joint filers, and $125,000 for married filing separately. Those thresholds have not been indexed for inflation and haven’t changed since 2013.10Internal Revenue Service. Topic no. 560, Additional Medicare Tax
Two features matter for deductibility. Employers do not match the Additional Medicare Tax; the 0.9% withheld once your wages pass $200,000 comes entirely from your pay regardless of your filing status.11Internal Revenue Service. Questions and Answers for the Additional Medicare Tax And the self-employment tax deduction does not cover it. The statute excludes the Additional Medicare Tax from the deductible half, so self-employed workers above the threshold absorb the full 0.9% with no offset.1Office of the Law Revision Counsel. 26 USC 164 – Taxes
Household Employers Cannot Deduct Their Share
If you pay a nanny, housekeeper, or caregiver $3,000 or more in cash wages during 2026, you owe the employer half of FICA and must withhold the employee’s half. Below that threshold, no Social Security or Medicare tax applies. Household employment taxes are reported on Schedule H, which attaches to your Form 1040.12Internal Revenue Service. Publication 926 (2026), Household Employer’s Tax Guide
Unlike a business employer, you cannot deduct your share of household FICA. The IRS treats household employment as a personal expense, so the employer’s matching contribution comes out of after-tax dollars.
The wages and employer FICA taxes you pay for household help can still count toward the Child and Dependent Care Credit if the care lets you work or look for work. You claim that credit on Form 2441, and it reduces your tax dollar for dollar, up to the applicable limits.13Internal Revenue Service. Instructions for Form 2441 (2025) – Section: Household Services A credit and a deduction work differently, but the credit path is often the more valuable of the two.
When Two Jobs Overwithhold Social Security
Each employer withholds Social Security tax independently, without knowing what any other employer is doing. If you hold two or more jobs in 2026 and your combined wages exceed $184,500, too much Social Security tax will come out overall. You can claim the excess as a credit, not a deduction, on your income tax return.14Internal Revenue Service. Topic no. 608, Excess Social Security and RRTA Tax Withheld
To figure the overpayment, take 6.2% of $184,500 ($11,439 for 2026) and compare that to the total Social Security tax withheld across your W-2s. The difference is your credit, reported on Schedule 3 and carried to Form 1040. This only works when the extra withholding came from more than one employer. If a single employer over-withheld, you have to work that out with the employer directly.
The FICA Tip Credit for Employers
Restaurants and other tipped-industry employers can claim a tax credit for the Social Security and Medicare taxes they pay on tip income above the federal minimum wage. The credit exists because employers owe FICA on reported tips even though tips are paid by customers.
You cannot deduct and take the credit on the same FICA dollars. If you claim the tip credit on a portion of your FICA costs, you give up the deduction on that same amount.15Office of the Law Revision Counsel. 26 USC 45B – Credit for Portion of Employer Social Security Taxes Paid With Respect to Employee Cash Tips Because a credit cuts your tax bill directly while a deduction only reduces taxable income, the credit is almost always the better outcome. Just track which FICA dollars you applied to which benefit so you don’t claim both.