FICA tax is the federal payroll tax that funds Social Security and Medicare, authorized by the Federal Insurance Contributions Act. If you earn wages in the United States, 7.65% comes out of every paycheck: 6.2% for Social Security and 1.45% for Medicare. Your employer pays a matching 7.65% on top of your wages. In 2026, the Social Security portion applies only to your first $184,500 in earnings; the Medicare portion has no cap.1Internal Revenue Service. Topic No. 751, Social Security and Medicare Withholding Rates2Social Security Administration. Contribution and Benefit Base
What FICA Pays For
The Social Security portion supports the Old-Age, Survivors, and Disability Insurance program, which pays monthly benefits to retired workers, their surviving family members, and people who can no longer work because of a disability.3Social Security Administration. Social Security Programs in the United States – Old-Age, Survivors, and Disability Insurance
The Medicare portion funds Hospital Insurance, which covers hospital and medical care mainly for people 65 and older. Younger people can qualify with certain disabilities, end-stage renal disease, or ALS.4Medicare. Get Started With Medicare
Your contributions also build your personal record of Social Security credits, which decide whether you qualify for benefits later. In 2026, you earn one credit for every $1,890 in wages, up to four credits per year. Most people need 40 credits, roughly ten years of work, to qualify for retirement benefits.5Social Security Administration. Quarter of Coverage
The Rate Breakdown
The 7.65% you pay splits into two pieces:
- Social Security: 6.2% withheld from your pay, plus 6.2% from your employer, for a combined 12.4%.
- Medicare: 1.45% withheld from your pay, plus 1.45% from your employer, for a combined 2.9%.
These rates are fixed by federal statute and apply to salary, bonuses, commissions, and cash tips of $20 or more in a calendar month.6Office of the Law Revision Counsel. 26 USC Ch. 21 Federal Insurance Contributions Act1Internal Revenue Service. Topic No. 751, Social Security and Medicare Withholding Rates
The Social Security Wage Base
Social Security tax stops once your wages for the year reach the contribution and benefit base. For 2026, that ceiling is $184,500, up from $176,100 in 2025. It adjusts each year with the national average wage index.7Social Security Administration. 2026 Cost-of-Living Adjustment (COLA) Fact Sheet
The most Social Security tax an employee can pay in 2026 is $11,439 (6.2% of $184,500), with the employer paying the same. Medicare has no equivalent ceiling; every dollar you earn is subject to the 1.45% rate.
The Extra 0.9% for Higher Earners
On top of the standard 1.45%, an Additional Medicare Tax of 0.9% applies to wages above these thresholds:8Office of the Law Revision Counsel. 26 USC 3101 – Rate of Tax
- Single filers: wages above $200,000
- Married filing jointly: combined wages above $250,000
- Married filing separately: wages above $125,000
Only the employee pays this. Your employer does not match it.
One thing catches people off guard. Your employer starts withholding the extra 0.9% the moment your wages at that job cross $200,000, whatever your filing status. If you’re married filing jointly and your household stays under $250,000, you’ll get the overpayment back as a credit when you file your return. The reverse also happens: if you and your spouse each earn under $200,000 but together clear $250,000, no employer withholds the additional tax during the year, and you’ll owe it at filing.9Internal Revenue Service. Questions and Answers for the Additional Medicare Tax
If You’re Self-Employed
Working for yourself means paying both halves. This is the Self-Employment Contributions Act (SECA) tax, and it funds the same programs. The rates are 12.4% for Social Security and 2.9% for Medicare, totaling 15.3%.10Social Security Administration. What Are FICA and SECA Taxes?11Office of the Law Revision Counsel. 26 USC 1401 – Rate of Tax
The math is a little kinder than a flat 15.3% of net profit. You first multiply your net self-employment income by 92.35%, and the result is what’s subject to the tax. You can also deduct half of your self-employment tax when figuring your adjusted gross income; this deduction sits above the line, so you get it whether or not you itemize. Everything runs through Schedule SE, filed with your Form 1040.12Internal Revenue Service. Topic No. 554, Self-Employment Tax
The $184,500 Social Security wage base and the Additional Medicare Tax thresholds apply to self-employment income the same way they apply to wages.2Social Security Administration. Contribution and Benefit Base You owe nothing if your net earnings for the year come in under $400. Above that, you’re expected to make quarterly estimated payments on April 15, June 15, September 15, and January 15 of the following year to avoid underpayment penalties.13Internal Revenue Service. Individuals 2 – When Are Quarterly Estimated Tax Payments Due?
Who Doesn’t Pay FICA
Most workers pay without exception, but a few groups are carved out.
Students working for the school, college, or university where they’re enrolled and pursuing a course of study are generally exempt on those wages. The question is whether education or employment is the main purpose of the relationship. A graduate student teaching a class typically qualifies; a full-time university employee taking one evening course usually doesn’t.14Internal Revenue Service. Student Exception to FICA Tax
Certain nonresident aliens in the U.S. on F-1, J-1, M-1, or Q-1 visas are exempt while they remain nonresidents and their work fits the terms of their visa. The exemption ends if they become resident aliens or switch to a non-exempt status.15Internal Revenue Service. Alien Liability for Social Security and Medicare Taxes of Foreign Teachers, Foreign Researchers and Other Foreign Professionals
Members of recognized religious groups that conscientiously oppose insurance benefits can apply for exemption by filing Form 4029 with the Social Security Administration. The group must have continuously provided for its dependent members since December 31, 1950, and the applicant must waive all rights to Social Security and Medicare benefits.16Social Security Administration. Are Members of Religious Groups Exempt From Paying Social Security Taxes
Some state and local government employees covered by a qualifying public retirement system are exempt from the Social Security portion. This varies by employer and is governed by agreements between the state and the federal government.17Internal Revenue Service. Government Retirement Plans Toolkit
Two Jobs and Over-Withholding
Each employer withholds Social Security tax based on what they pay you, and no employer knows what the others are paying. If your combined wages exceed the $184,500 wage base in 2026, you’ll have too much Social Security tax withheld across your W-2s.
You claim the excess as a credit against your income tax when you file your federal return; the Form 1040 instructions walk through the calculation.18Internal Revenue Service. Topic No. 608, Excess Social Security and RRTA Tax Withheld A single employer, by contrast, should stop withholding Social Security tax automatically once your year-to-date wages hit the cap. If yours doesn’t, ask them to correct it rather than waiting for tax season.
When an Employer Fails to Pay It Over
FICA taxes withheld from employee paychecks are “trust fund” money. The employer holds it for the government, not itself. If a business fails to send those amounts to the IRS, any “responsible person” can be held personally liable for 100% of the unpaid tax under the Trust Fund Recovery Penalty. That reach extends to owners, officers, and even bookkeepers who had authority over the company’s finances.19Office of the Law Revision Counsel. 26 USC 6672 – Failure to Collect and Pay Over Tax, or Attempt to Evade or Defeat Tax
The penalty applies when the responsible person willfully fails to pay. “Willfully” doesn’t mean intent to defraud; knowingly using withheld tax money to cover other business expenses is enough. This is one of the few areas where the IRS can reach past limited liability protection, and it’s the reason payroll tax should be the last bill a struggling business stops paying.