FICA stands for the Federal Insurance Contributions Act, the law that creates the payroll tax funding Social Security and Medicare. If you earn a paycheck in the United States, you almost certainly pay it. For 2026, the employee share is 7.65% of covered wages: 6.2% for Social Security on earnings up to $184,500, plus 1.45% for Medicare on every dollar you earn. Your employer withholds that amount and pays a matching 7.65% on top, so the total FICA tax on your wages is 15.3%.
The Two Taxes Inside FICA
FICA is really two taxes bundled under one name on your pay stub.
The first is Old-Age, Survivors, and Disability Insurance, which most people just call Social Security. It funds retirement benefits, disability payments, and survivor benefits for workers and their families.1Social Security Administration. Annual Statistical Supplement, 2020 – Social Security (Old-Age, Survivors, and Disability Insurance) Program Description and Legislative History
The second is the Hospital Insurance tax, which funds Medicare. Medicare covers people 65 and older, certain younger people with disabilities, and people with end-stage renal disease.2Medicare.gov. End-Stage Renal Disease (ESRD) Both taxes sit in Chapter 21 of the Internal Revenue Code.3Office of the Law Revision Counsel. 26 USC Ch. 21 Federal Insurance Contributions Act
How Much Comes Out of Your Paycheck
The Social Security piece is 6.2% of your wages, but only up to an annual cap called the wage base limit. For 2026 that cap is $184,500.4Social Security Administration. Contribution and Benefit Base Every dollar you earn above $184,500 is free of Social Security tax, so the most any employee can owe for the year is $11,439. The cap usually rises each year with average wage growth.
The Medicare piece is 1.45% on all your wages, with no upper limit at all.1Social Security Administration. Annual Statistical Supplement, 2020 – Social Security (Old-Age, Survivors, and Disability Insurance) Program Description and Legislative History Someone earning $500,000 pays 1.45% on the full amount.
The Additional Medicare Tax
Higher earners owe an extra 0.9% Medicare surtax on earned income above thresholds that depend on filing status and are not adjusted for inflation:5IRS. Instructions for Form 8959
- Single or head of household: 0.9% on earnings above $200,000
- Married filing jointly: 0.9% on combined earnings above $250,000
- Married filing separately: 0.9% on earnings above $125,000
Above those thresholds the effective Medicare rate becomes 2.35%. Your employer must start withholding the extra 0.9% once your wages from that one job pass $200,000 in a calendar year, regardless of your filing status.5IRS. Instructions for Form 8959 That creates a quirk for married couples. If each spouse earns $180,000, neither employer withholds the surtax, yet the couple owes it on $110,000 of combined earnings ($360,000 minus the $250,000 joint threshold). They settle up on Form 8959 with their return.
What Your Employer Pays
For every dollar of FICA withheld from your check, your employer pays a matching dollar out of its own pocket. That is why the combined rate is 15.3%: 12.4% total for Social Security (capped at the wage base) and 2.9% total for Medicare (uncapped).3Office of the Law Revision Counsel. 26 USC Ch. 21 Federal Insurance Contributions Act
The one exception is the Additional Medicare Tax. The 0.9% surtax is the employee’s alone; the employer does not match it.5IRS. Instructions for Form 8959
At year end, your W-2 shows what came out. Boxes 3 and 4 show Social Security wages and tax withheld, and Boxes 5 and 6 show Medicare wages and tax withheld.6Internal Revenue Service. General Instructions for Forms W-2 and W-3 (2026) – Section: Specific Instructions for Form W-2 Comparing those numbers against your final pay stub is the fastest way to spot a withholding error.
What Counts as Wages for FICA
FICA applies to “wages,” defined broadly as all pay for work, including bonuses, commissions, and the cash value of non-cash compensation.7Office of the Law Revision Counsel. 26 U.S. Code 3121 – Definitions But several common pretax deductions shrink the figure before the tax is calculated.
Contributions through a Section 125 cafeteria plan, such as health insurance premiums or flexible spending account deposits, generally come out before FICA.8Internal Revenue Service. FAQs for Government Entities Regarding Cafeteria Plans Traditional 401(k) contributions are different: they skip federal income tax but still get hit with FICA. So if you earn $80,000 and defer $5,000 to a 401(k), you pay FICA on the full $80,000.
Two cafeteria items stay FICA-taxable despite the general rule: employer-provided group-term life insurance above $50,000 of coverage and adoption assistance benefits.8Internal Revenue Service. FAQs for Government Entities Regarding Cafeteria Plans
Tips are wages too. Your employer withholds FICA on tips you report. If you receive tips you don’t report to your employer, you owe the Social Security and Medicare tax yourself on Form 4137 when you file.9Internal Revenue Service. About Form 4137, Social Security and Medicare Tax On Unreported Tip Income
If You’re Self-Employed
No employer, no match. Under the Self-Employment Contributions Act, you pay both halves yourself: 12.4% for Social Security and 2.9% for Medicare, for the same 15.3% total.10Office of the Law Revision Counsel. 26 U.S. Code 1401 – Rate of Tax The 0.9% Additional Medicare Tax applies to self-employment income above the same filing-status thresholds that apply to employees.5IRS. Instructions for Form 8959
You don’t pay the tax on every dollar of profit, though. The tax base is 92.35% of your net self-employment income, an adjustment meant to mirror the fact that W-2 workers don’t owe FICA on the employer’s share. On $100,000 of Schedule C profit, you’d calculate self-employment tax on $92,350. You do the math on Schedule SE and file it with Form 1040.
The wage base cap still applies to the Social Security portion: for 2026, the 12.4% rate hits adjusted self-employment income only up to $184,500.4Social Security Administration. Contribution and Benefit Base The 2.9% Medicare rate runs across all of it.
One partial offset: you can deduct half of your self-employment tax above the line on Form 1040, meaning you get it whether or not you itemize. The deduction reduces your income tax, not the self-employment tax itself.
Who Doesn’t Pay FICA
The exemptions are narrow. Students enrolled at least half-time who work for the same school may qualify, as long as the job is incidental to the studies and not a professional staff position with benefits like a retirement plan, vacation, or sick leave.11Internal Revenue Service. Student FICA Exception
Foreign students and exchange visitors on F-1, J-1, or M-1 visas are generally FICA-exempt on qualifying employment during their first five calendar years in the United States. Once they meet the substantial presence test and become resident aliens for tax purposes, the exemption ends.12Internal Revenue Service. Foreign Student Liability for Social Security and Medicare Taxes
Members of recognized religious groups that have existed continuously since December 31, 1950, and that are conscientiously opposed to insurance benefits can apply using IRS Form 4029. Approval requires permanently waiving all Social Security and Medicare benefits.13Internal Revenue Service. Form 4029, Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits
Getting Back Overpaid Social Security Tax
If you worked for two or more employers in 2026 and your combined wages exceeded $184,500, each employer withheld 6.2% independently, with no way of knowing about the other job. The result: you probably paid more Social Security tax than you actually owe. You claim the excess as a credit on your income tax return, following the Form 1040 instructions.14Internal Revenue Service. Topic No. 608, Excess Social Security and RRTA Tax Withheld On a joint return, each spouse figures the excess separately, because the wage base is per person, not per household.
This comes up more often than people expect. Anyone who changed jobs mid-year and crossed the wage base at both employers should run the numbers. The IRS doesn’t refund it automatically.