Social Security and Medicare tax is calculated as a flat percentage of your covered wages: 6.2% for Social Security on earnings up to an annual cap, and 1.45% for Medicare on every dollar you earn. Your employer withholds those amounts from each paycheck and pays a matching share out of its own funds, so the combined rate is 15.3% split evenly between the two of you. Self-employed workers pay both halves themselves. A 0.9% Medicare surcharge applies to wages above certain thresholds for higher earners.
The Two Rates and How to Run the Math
The employee share of Social Security tax is 6.2% of your taxable wages. The standard Medicare tax is 1.45% of your taxable wages with no cap.1Office of the Law Revision Counsel. 26 USC 3101 – Rate of Tax Together, that’s 7.65% withheld from your pay. Your employer pays a matching 7.65% separately.
To check a single paycheck, multiply your gross taxable pay for that period by 0.062 for Social Security and by 0.0145 for Medicare. On $2,000 of taxable pay in a period, Social Security withholding is $124 and Medicare withholding is $29. Over a full year at $60,000 in taxable wages, Medicare withholding comes to $870, and your employer pays another $870.
Which Earnings Count as Taxable Wages
Federal law defines taxable wages broadly as nearly all pay you receive for work, including the cash value of certain non-cash benefits.2Office of the Law Revision Counsel. 26 USC 3121 – Definitions Regular salary or hourly pay, bonuses, commissions, and reported tips all count. The imputed cost of employer-provided group-term life insurance above $50,000 in coverage is also added to your FICA-taxable wages, even though it never appears as cash in your check.3Internal Revenue Service. Group-Term Life Insurance
Several common paycheck items are excluded. Benefits you elect through a Section 125 cafeteria plan, such as health, dental, or vision premiums, are generally not subject to FICA.4Internal Revenue Service. FAQs for Government Entities Regarding Cafeteria Plans Employer matching contributions to a retirement plan like a 401(k) are excluded too. Your own pre-tax 401(k) salary deferrals, however, remain subject to Social Security and Medicare tax even though they reduce your federal income tax.5Internal Revenue Service. Retirement Plan FAQs Regarding Contributions Business-expense reimbursements paid under an accountable plan are also excluded from the taxable wage total.6eCFR. 26 CFR 1.62-2 – Reimbursements and Other Expense Allowance Arrangements This is why the “gross wages” line on your pay stub often differs from the “Social Security wages” or “Medicare wages” figure.
The Social Security Wage Base Limit
Social Security tax stops once your year-to-date earnings reach the annual wage base. For 2026, that limit is $184,500.7Social Security Administration. Contribution and Benefit Base After you hit it, neither you nor your employer owes any more Social Security tax that calendar year, and every dollar above the cap escapes the 6.2% deduction. The maximum employee Social Security tax for 2026 works out to $11,439, which is $184,500 multiplied by 0.062. The cap resets on January 1 and typically rises each year to track average wage growth.
Medicare has no equivalent ceiling. The 1.45% applies to your wages for the entire year, no matter how high they go.
The 0.9% Additional Medicare Tax
If your wages pass a threshold set by your filing status, an extra 0.9% Medicare surcharge applies to the amount above that threshold.1Office of the Law Revision Counsel. 26 USC 3101 – Rate of Tax The thresholds are $200,000 for single, head of household, or qualifying surviving spouse filers; $250,000 for married filing jointly; and $125,000 for married filing separately.
The surcharge only touches wages above the threshold, not your full salary. A single filer earning $230,000 pays the standard 1.45% on the whole $230,000 plus an additional 0.9% on the $30,000 above $200,000, an extra $270 for the year. Employers do not match the 0.9%.
Your employer is required to begin withholding the extra 0.9% once your wages with that employer pass $200,000 in the year, regardless of your actual filing status. If you’re married filing jointly and neither spouse individually reaches $200,000, no employer will withhold the surcharge even though you may still owe it once your combined wages top $250,000. Someone filing separately with a $125,000 threshold can face the opposite problem: too little withheld. Either way, you square up when you file, using Form 8959.8Internal Revenue Service. About Form 8959, Additional Medicare Tax
Self-Employment: Paying Both Halves
If you work for yourself as a freelancer, independent contractor, or sole proprietor, you owe both the employee and employer shares. The combined rate is 15.3%: 12.4% for Social Security and 2.9% for Medicare.9Office of the Law Revision Counsel. 26 USC 1401 – Rate of Tax You owe self-employment tax once your net earnings from self-employment hit $400 for the year.10Internal Revenue Service. Topic No. 554, Self-Employment Tax
Before applying the 15.3% rate, reduce your net profit by 7.65%, or equivalently, multiply it by 92.35%.11Office of the Law Revision Counsel. 26 USC 1402 – Definitions This adjustment mirrors the tax break traditional employees get because their employer’s half of FICA isn’t treated as income to them. On $100,000 of net self-employment income, you calculate self-employment tax against $92,350. The 12.4% Social Security portion still stops at the $184,500 wage base. The 2.9% Medicare portion runs on all of it, and the 0.9% Additional Medicare Tax attaches once your earnings exceed the thresholds above.9Office of the Law Revision Counsel. 26 USC 1401 – Rate of Tax
One offset is built into the system. You can deduct half of your self-employment tax from your adjusted gross income, which lowers your income tax.12Office of the Law Revision Counsel. 26 USC 164 – Taxes The deduction goes on Schedule 1 of Form 1040 and is available whether or not you itemize.10Internal Revenue Service. Topic No. 554, Self-Employment Tax It covers only the base 12.4% and 2.9% portions, not the 0.9% Additional Medicare Tax.