FICA tax is the federal payroll tax that funds Social Security and Medicare. In 2026, employees pay 7.65% of gross wages and employers match it, for a combined rate of 15.3%.1Internal Revenue Service. Topic No. 751, Social Security and Medicare Withholding Rates Your 7.65% share splits into 6.2% for Social Security, which applies only to the first $184,500 of wages, and 1.45% for Medicare, which applies to every dollar you earn. If you get a paycheck in the United States, this money comes out automatically before it ever hits your bank account.
What FICA Pays For
The Social Security piece funds the Old-Age, Survivors, and Disability Insurance program. That pays monthly benefits to retirees, to surviving spouses and children of workers who have died, and to people who can no longer work because of a qualifying disability.2Office of the Law Revision Counsel. 26 USC 3101 – Rate of Tax
The Medicare piece funds Part A, which covers hospital stays, skilled nursing facility care, hospice, and some home health services.3Medicare. When Can I Sign Up for Medicare Most people become eligible at 65, though certain disabilities and conditions like end-stage kidney disease can qualify you sooner.4HHS.gov. Who Is Eligible for Medicare
Your FICA payments also build the work credits you need to draw benefits later. In 2026, you earn one credit for every $1,890 in covered wages, up to four credits per year.5Social Security Administration. Quarter of Coverage You generally need 40 credits, or roughly ten years of covered work, to qualify for Social Security retirement benefits. Gaps in your work history matter here: stopping short of 40 credits can leave you outside the program entirely.
How Much Comes Out of Your Paycheck
The Social Security portion is 6.2% on wages up to $184,500 in 2026.1Internal Revenue Service. Topic No. 751, Social Security and Medicare Withholding Rates Once your year-to-date wages pass that cap, the Social Security withholding stops for the rest of the year, and your employer’s matching 6.2% stops too. The Social Security Administration resets this wage base every year to track national average earnings.6Social Security Administration. 2026 Cost-of-Living Adjustment (COLA) Fact Sheet
Medicare works differently. There’s no wage base at all. The 1.45% comes out of every dollar, no matter how much you make.2Office of the Law Revision Counsel. 26 USC 3101 – Rate of Tax Add the two pieces together and you get the 7.65% employee share, which the employer matches for a total of 15.3%.
Your employer handles all of this. Under 26 U.S.C. § 3102, the employer is legally required to deduct your share from each paycheck and send it to the IRS along with the matching employer share.7Office of the Law Revision Counsel. 26 USC 3102 – Deduction of Tax From Wages There is nothing you file separately for FICA as a W-2 employee.
The Extra 0.9% for High Earners
An Additional Medicare Tax of 0.9% applies once your wages cross $200,000 in a calendar year, or $250,000 if you’re married filing jointly.8Office of the Law Revision Counsel. 26 USC 3101 – Rate of Tax Those thresholds are written into the statute and are not adjusted for inflation, so more workers cross them each year as wages rise. On the portion above the threshold, your Medicare rate becomes 2.35% instead of 1.45%. Your employer does not match this piece. It falls entirely on you.9Internal Revenue Service. Publication 926 (2026), Household Employer’s Tax Guide
Pay That Isn’t FICA Wages
Not every dollar your employer pays you counts as FICA wages. Employer-paid health insurance premiums, employer contributions to a health savings account, and medical care reimbursements under a self-insured plan are common exclusions.10Internal Revenue Service. Publication 15 (2026), (Circular E), Employer’s Tax Guide Benefits you take through a Section 125 cafeteria plan, such as pre-tax health insurance deductions or flexible spending account contributions, are also generally excluded.11Internal Revenue Service. FAQs for Government Entities Regarding Cafeteria Plans That’s why the wages in Box 1 of your W-2 often look smaller than your gross salary: those pre-tax pieces were never FICA wages to begin with.
If You’re Self-Employed, You Pay Both Halves
When you work for yourself, there’s no employer to split the tax with. The Self-Employment Contributions Act mirrors FICA at the same 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 with no cap.12Office of the Law Revision Counsel. 26 USC 1401 – Rate of Tax The 0.9% Additional Medicare Tax applies too, at the same $200,000 and $250,000 thresholds.13Social Security Administration. Contribution and Benefit Base
Paying both sides is softened by one break. When you calculate adjusted gross income, you can deduct half of your self-employment tax.14Internal Revenue Service. Topic No. 554, Self-Employment Tax That deduction reduces your income tax, not your self-employment tax itself. You compute the whole thing on Schedule SE and take the deduction on Schedule 1 of Form 1040.
If You Hire Household Help
Paying a nanny, housekeeper, or other household worker $3,000 or more in cash wages during 2026 makes you a household employer, and FICA applies to those wages.9Internal Revenue Service. Publication 926 (2026), Household Employer’s Tax Guide Once you cross the $3,000 line, every cash dollar you paid that worker during the year becomes subject to FICA, not just the amount above $3,000. Stay under $3,000 for the full year and neither of you owes anything.
Household employers don’t file Form 941. You report the taxes on Schedule H and attach it to your personal Form 1040.15Internal Revenue Service. About Schedule H (Form 1040), Household Employment Taxes This is one of the more commonly missed FICA obligations. Someone hires a part-time caregiver, pays in cash, and doesn’t learn about the payroll tax until years later.
Who Is Exempt from FICA
A handful of specific groups are carved out by statute. When an exemption applies, neither the worker nor the employer owes FICA on the covered wages.
Students Working for Their Own School
If you’re enrolled at least half-time at a school, college, or university and you work for that same institution, your wages are generally exempt. The work has to be incidental to your studies, not the reverse.16Internal Revenue Service. Student FICA Exception A job at an off-campus employer doesn’t qualify, even if you’re a full-time student. The exemption is set out in 26 U.S.C. § 3121(b)(10) and covers services performed for the school itself or for certain affiliated nonprofits.17Office of the Law Revision Counsel. 26 US Code 3121 – Definitions
Nonresident Students and Exchange Visitors
Foreign students and exchange visitors on F-1, J-1, or M-1 visas who have been in the U.S. for fewer than five calendar years are generally treated as nonresident aliens and exempt from FICA. The work has to be USCIS-authorized and tied to the purpose of the visa, such as on-campus employment or approved practical training.18Internal Revenue Service. Foreign Student Liability for Social Security and Medicare Taxes Once you’ve been present for five calendar years, or you change to a non-exempt status, the exemption ends. Dependents on F-2, J-2, and M-2 visas do not qualify.
Members of Qualifying Religious Sects
Members of recognized religious sects with their own system for caring for elderly and dependent members can apply for a FICA exemption on Form 4029. For employees, the exemption under 26 U.S.C. § 3127 requires that both the employer and the employee belong to the same qualifying sect and that each apply and be approved separately.19Office of the Law Revision Counsel. 26 US Code 3127 – Exemption for Employers and Their Employees Where Both Are Members of Religious Faiths Opposed to Participation in Social Security Act Programs Self-employed members can claim a parallel exemption under 26 U.S.C. § 1402(g).20Office of the Law Revision Counsel. 26 USC 1402 – Definitions In either case, you permanently waive all rights to Social Security and Medicare benefits. The sect must have existed continuously since December 31, 1950, and have an established practice of supporting its dependent members.
Foreign Government Employees
People employed in the United States by a foreign government, including consular officers and diplomatic staff, are exempt.21Office of the Law Revision Counsel. 26 USC 3121 – Definitions Employees of foreign government-owned agencies can also qualify, but only if the work matches what U.S. government employees do abroad and the foreign country grants a reciprocal exemption to American workers.
What Happens When an Employer Doesn’t Pay
The IRS treats unpaid payroll taxes with unusual severity. When an employer withholds FICA from paychecks and then fails to send that money to the government, the withheld amount is considered a trust fund belonging to the United States. Failing to hand it over triggers the Trust Fund Recovery Penalty, which equals 100% of the unpaid tax.22Office of the Law Revision Counsel. 26 US Code 6672 – Failure to Collect and Pay Over Tax, or Attempt to Evade or Defeat Tax The penalty is not limited to the business. The IRS can assess it personally against any individual who was responsible for collecting the tax and willfully failed to do so, including business owners, officers, payroll managers, and bookkeepers with check-signing authority.