To calculate Social Security and Medicare tax, multiply your taxable wages by 6.2% for Social Security, up to a wage base of $184,500 in 2026, and by 1.45% for Medicare with no cap.1Internal Revenue Service. Topic No. 751, Social Security and Medicare Withholding Rates2Social Security Administration. What Is the Current Maximum Amount of Taxable Earnings for Social Security If you work for yourself, both rates double, and a 0.9% surtax layers on top of Medicare once your income passes a threshold tied to your filing status. The math is simple once you know which dollars count as taxable wages and which rate reaches them.
Figure Out Which Earnings Are Taxable
Start with gross pay: salary, bonuses, commissions, vacation pay, and most taxable fringe benefits.3Internal Revenue Service. Publication 15 (2026), (Circular E), Employer’s Tax Guide Some pre-tax deductions lower that number before FICA applies. Others don’t, and this is where most people miscalculate.
Section 125 cafeteria plan contributions — health insurance premiums paid pre-tax, flexible spending account contributions, and similar benefits — are generally excluded from Social Security and Medicare wages.4Internal Revenue Service. FAQs for Government Entities Regarding Cafeteria Plans Traditional 401(k) and 403(b) deferrals do not. Even though those retirement contributions reduce your income for federal income tax, your employer still withholds FICA on the full amount before the deferral comes out.5Internal Revenue Service. Retirement Plan FAQs Regarding Contributions – Are Retirement Plan Contributions Subject to Withholding for FICA, Medicare or Federal Income Tax? So your FICA base is usually higher than your income tax wages.
Several employer-provided fringe benefits are also excluded from FICA wages, including employer-paid health insurance, group-term life insurance on the first $50,000 of coverage, educational assistance up to $5,250 per year, dependent care assistance up to $7,500, de minimis benefits, and qualified transportation benefits up to $340 per month.6Internal Revenue Service. Employer’s Tax Guide to Fringe Benefits (2026) When any of these apply, the value won’t show up in the Social Security or Medicare wage boxes on your W-2. Those boxes are your calculation base.
Calculate Social Security Tax
For 2026, apply 6.2% to every dollar of taxable wages up to $184,500. Once your cumulative wages hit that cap during the year, withholding stops until January 1 of the next year, when the base resets.
A worker with $100,000 in taxable wages owes $100,000 × 0.062 = $6,200 in Social Security tax for the year. A worker earning $250,000 pays on only the first $184,500, which comes to $11,439. The remaining $65,500 is free of Social Security tax entirely.
Calculate Medicare Tax
Medicare tax is a flat 1.45% on every dollar of taxable wages, no cap, no phase-out. On $100,000 in wages, that’s $1,450. On $250,000, it’s $3,625. Withholding continues on every paycheck all year.
Add the 0.9% Additional Medicare Tax If You Cross the Threshold
Higher earners owe an extra 0.9% on wages above a threshold set by filing status:7Office of the Law Revision Counsel. 26 USC 3101 – Rate of Tax
- Single or head of household: $200,000
- Married filing jointly: $250,000
- Married filing separately: $125,000
Only the wages above your threshold get the surtax.8Internal Revenue Service. Topic No. 560, Additional Medicare Tax A single filer earning $300,000 subtracts the $200,000 threshold, then applies 0.9% to the remaining $100,000, for $900 of Additional Medicare Tax. That’s on top of the regular 1.45% that already ran against the full $300,000.
Your employer starts withholding the surtax once your wages with that employer cross $200,000, regardless of your actual filing status.9Internal Revenue Service. Questions and Answers for the Additional Medicare Tax If you’re married filing jointly with a $250,000 threshold, or if you have two jobs that each fall under $200,000 but combine to more, withholding may not match what you actually owe. The difference gets settled on your annual return.
Calculate Self-Employment Tax
Work for yourself and you pay both sides: 12.4% for Social Security and 2.9% for Medicare, for a combined self-employment tax of 15.3%. The tax kicks in when your net self-employment earnings reach $400 for the year.10Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes)
You don’t apply those rates to your full net profit. First, multiply net earnings by 92.35% (0.9235) to get your taxable self-employment income.11Internal Revenue Service. Topic No. 554, Self-Employment Tax This adjustment mirrors a benefit W-2 employees get automatically, since the employer’s half of FICA isn’t counted as their income.
Then apply the two rates. The 12.4% Social Security rate hits the adjusted earnings up to the same $184,500 wage base for 2026.12Social Security Administration. 2026 Cost-of-Living Adjustment (COLA) Fact Sheet The 2.9% Medicare rate hits the entire adjusted amount with no cap.13Office of the Law Revision Counsel. 26 USC 1401 – Rate of Tax
Walk through $120,000 in net self-employment income:
- Adjusted earnings: $120,000 × 0.9235 = $110,820
- Social Security portion: $110,820 × 0.124 = $13,741.68
- Medicare portion: $110,820 × 0.029 = $3,213.78
- Total self-employment tax: $16,955.46
Report it on Schedule SE with your Form 1040. The 0.9% Additional Medicare Tax applies to self-employment income too, using the same filing-status thresholds. If your adjusted self-employment income clears your threshold, add 0.9% on the excess.8Internal Revenue Service. Topic No. 560, Additional Medicare Tax
Deduct Half of Self-Employment Tax
You can deduct one-half of your self-employment tax as an adjustment to gross income on Form 1040.11Internal Revenue Service. Topic No. 554, Self-Employment Tax The deduction lowers your adjusted gross income and reduces your income tax bill. It doesn’t cut the self-employment tax itself — you still write that check in full.
Working Two Jobs? Watch the Social Security Cap
Each employer withholds Social Security tax independently, based only on what it pays you. Hold two jobs paying $120,000 each and both employers will keep withholding 6.2% on their full payroll to you, even though your combined $240,000 sits well above the $184,500 cap. That’s overpayment.
You recover the excess when you file, claiming it as a credit against income tax on Form 1040.14Internal Revenue Service. Topic No. 608, Excess Social Security and RRTA Tax Withheld A single employer, by contrast, should stop withholding at the cap on its own, so the credit generally only comes up with multiple employers.
Who Can Skip FICA Entirely
Almost no one can opt out of Social Security and Medicare tax, but two narrow exceptions exist and are worth knowing so you don’t assume you qualify.
Students working for the school, college, or university where they are enrolled and regularly attending classes are generally exempt from FICA on that specific income. The work must be incidental to studying. Professional employees of the institution don’t qualify, even if they take classes on the side — professional status kicks in when the worker is eligible for retirement plan contributions, vacation and sick leave, or other standard employment benefits.15Internal Revenue Service. Student FICA Exception
Members of certain recognized religious groups can apply for a complete exemption using Form 4029. The group must have existed continuously since December 31, 1950, and be conscientiously opposed to accepting insurance benefits for death, disability, retirement, or medical care. The applicant permanently waives all rights to Social Security and Medicare benefits.16Internal Revenue Service. Form 4029, Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits The exemption is irrevocable, and it forfeits future benefits for the worker and any dependents.