How to Calculate FICA Wages: Rates, Wage Base, and Deductions

To calculate FICA wages, start with your gross compensation for the pay period, subtract the specific pre-tax deductions that qualify (chiefly cafeteria-plan health premiums, HSA contributions, and FSA contributions), and apply the 2026 rates to the result: 6.2% Social Security on wages up to $184,500 and 1.45% Medicare on every dollar, with an extra 0.9% Medicare surtax once year-to-date wages pass $200,000. Your employer matches the 6.2% and 1.45% but not the 0.9%.

What Counts Toward Gross Compensation

Federal law defines wages broadly as all pay for employment, including the cash value of non-cash compensation.¹ Before any deductions, your starting figure includes:

Salaries and hourly wages.
Bonuses and commissions, including signing bonuses.²
Vacation and sick pay.
Cash tips of $20 or more in any calendar month, once reported to your employer.³
Taxable fringe benefits, such as personal use of a company vehicle or an employer-paid gym membership.
The imputed cost of employer-provided group-term life insurance for coverage above $50,000.⁴

Your W-2 is the year-end record of these amounts.⁵ Hold on to your pay stubs so you can verify the running totals.

Which Pre-Tax Deductions Reduce FICA Wages

Only a narrow set of pre-tax elections actually lowers the wage figure FICA is applied to. Most run through a Section 125 cafeteria plan, which excludes qualifying benefits from both income tax and FICA.⁶ The deductions that reduce FICA wages are:

Employee contributions to employer-sponsored medical, dental, and vision plans made through a cafeteria plan.¹
Health Savings Account contributions made through payroll, along with employer HSA contributions.⁷
Healthcare FSA and dependent care FSA contributions through a cafeteria plan.

401(k) Contributions Do Not Reduce FICA Wages

This is where paycheck calculations most often go wrong. Traditional 401(k), 403(b), and similar salary-deferral contributions reduce federal income tax withholding but not FICA. The full deferred amount stays subject to Social Security and Medicare taxes.¹ If gross pay for the period is $5,000 and you defer $500 to a 401(k), your FICA wages for that period are still $5,000 before any cafeteria-plan deductions.

2026 Rates, Wage Base, and Surtax Thresholds

FICA has two components, each with its own rules.

Social Security

The rate is 6.2% for the employee and 6.2% for the employer.⁸ For 2026, only the first $184,500 of FICA wages is taxed. Once year-to-date FICA wages hit the cap, no more Social Security tax is withheld that year. Maximum employee-side Social Security tax for 2026 is $11,439.⁹

Medicare

The standard rate is 1.45% for the employee and 1.45% for the employer, with no wage cap.⁸ An Additional Medicare Tax of 0.9% applies to employee wages above a filing-status threshold:¹⁰

Single or head of household: $200,000.
Married filing jointly: $250,000.
Married filing separately: $125,000.

Above those amounts, the employee-side Medicare rate effectively becomes 2.35%. Employers do not match the 0.9%. Your employer withholds the surtax once your wages from that job cross $200,000, regardless of filing status.¹¹ Joint filers reconcile any shortfall or overpayment on Form 8959 when they file. These thresholds are statutory and are not indexed for inflation.¹²

The Calculation, Step by Step

Step 1. Total your gross compensation for the period: wages, bonuses, commissions, reported tips, and taxable fringe benefits.
Step 2. Subtract only the pre-tax deductions that reduce FICA wages: cafeteria-plan health premiums, payroll HSA contributions, and FSA contributions. Do not subtract 401(k) or 403(b) deferrals.
Step 3. The result is your FICA wages for the period.
Step 4. Apply 6.2% Social Security to FICA wages up to the $184,500 year-to-date cap. Nothing above the cap is taxed for Social Security.
Step 5. Apply 1.45% Medicare to all FICA wages, with no cap.
Step 6. If year-to-date FICA wages exceed $200,000, add 0.9% on every dollar above that mark. Reconcile against your filing-status threshold at tax time.

A Worked Example

Suppose your annual salary is $210,000. You pay $6,000 through a cafeteria-plan health premium and $3,000 into an HSA through payroll.

FICA wages: $210,000 − $6,000 − $3,000 = $201,000.
Social Security tax: $184,500 × 6.2% = $11,439.
Medicare tax: $201,000 × 1.45% = $2,914.50.
Additional Medicare Tax: $1,000 (the amount above $200,000) × 0.9% = $9.
Total employee-side FICA: $14,362.50.

If You Work More Than One Job

Each employer withholds Social Security tax on its own, without knowing what other employers have withheld. When combined wages from two or more jobs pass the $184,500 base, you almost always end up with too much Social Security tax withheld. You claim the excess as a credit on your federal income tax return; the Form 1040 instructions walk through the calculation.¹³

Medicare has no cap, so there is no overpayment at the standard 1.45% rate. The Additional Medicare Tax is different: each employer starts withholding 0.9% only after its own $200,000 mark, so depending on how your wages split across jobs you can end up either short or over. Form 8959 handles the reconciliation.

When the Method Does Not Apply

Some workers are outside the FICA system entirely and should not run this calculation against their pay. The main categories are certain students working for the school where they are enrolled at least half-time,¹⁴ children under 18 working in a parent’s sole proprietorship (under 21 for domestic work in a parent’s home),¹⁵ and nonresident alien students on F-1, J-1, or M-1 visas within their first five calendar years in the United States.¹⁶

Self-employed workers use a separate system. Under the Self-Employment Contributions Act, you pay both halves yourself at a combined 15.3%: 12.4% for Social Security on net self-employment income up to $184,500 and 2.9% for Medicare on all net self-employment income.⁹ The 0.9% Additional Medicare Tax applies to self-employment income at the same filing-status thresholds.¹⁷ Half of your self-employment tax is deductible when calculating adjusted gross income on Schedule SE.¹⁸

If a check against your own numbers shows too much or too little withheld, ask your employer to correct it first. If they cannot, you can file a claim with the IRS; the window is generally three years from the date the original return was filed or two years from the date the tax was paid, whichever is later.¹⁹

1
Office of the Law Revision Counsel. 26 USC 3121 – Definitions
2
Internal Revenue Service. Publication 15 (2026), (Circular E), Employer’s Tax Guide
3
Internal Revenue Service. Topic No. 761, Tips – Withholding and Reporting
4
Internal Revenue Service. Group-Term Life Insurance
5
Office of the Law Revision Counsel. 26 USC 6051 – Receipts for Employees
6
Office of the Law Revision Counsel. 26 USC 125 – Cafeteria Plans
7
Internal Revenue Service. Publication 969 (2025), Health Savings Accounts and Other Tax-Favored Health Plans
8
Office of the Law Revision Counsel. 26 USC Ch. 21 – Federal Insurance Contributions Act
9
Social Security Administration. Contribution and Benefit Base
10
Office of the Law Revision Counsel. 26 USC 3101 – Rate of Tax
11
Internal Revenue Service. Topic No. 751, Social Security and Medicare Withholding Rates
12
Internal Revenue Service. Instructions for Form 8959
13
Internal Revenue Service. Topic No. 608, Excess Social Security and RRTA Tax Withheld
14
Internal Revenue Service. Student FICA Exception
15
Internal Revenue Service. Family Employees
16
Internal Revenue Service. Foreign Student Liability for Social Security and Medicare Taxes
17
Internal Revenue Service. Topic No. 560, Additional Medicare Tax
18
Internal Revenue Service. Topic No. 554, Self-Employment Tax
19
Office of the Law Revision Counsel. 26 U.S. Code 6511 – Limitations on Credit or Refund