FICA tax is a federal payroll tax that funds Social Security and Medicare. If you work for an employer, 7.65% of your gross wages is withheld under FICA: 6.2% for Social Security and 1.45% for Medicare. Your employer pays a matching 7.65% out of its own funds, so the combined contribution on your wages totals 15.3%.1Internal Revenue Service. Topic No. 751, Social Security and Medicare Withholding Rates Self-employed workers pay both halves themselves.
Where the Money Goes
FICA revenue doesn’t go into general federal spending. It flows into two dedicated trust funds managed by the Treasury and can only be used to pay Social Security and Medicare benefits.2Office of the Law Revision Counsel. 26 USC Ch. 21 – Federal Insurance Contributions Act Social Security pays monthly benefits to retirees, workers with long-term disabilities, and surviving family members of deceased workers. Medicare provides health insurance mainly for people 65 and older, and also for younger individuals with certain disabilities, end-stage renal disease, or ALS.3HHS.gov. Who’s Eligible for Medicare? The wages you pay FICA on today build toward your own future eligibility for both programs.
The Employee and Employer Split
On each paycheck, your employer withholds 6.2% for Social Security and 1.45% for Medicare from your gross pay. The employer then contributes an identical 7.65% from its own funds.1Internal Revenue Service. Topic No. 751, Social Security and Medicare Withholding Rates You won’t see the employer’s share on your pay stub, but it’s a real cost of employing you and part of what makes total compensation different from the salary line in an offer letter.
The Social Security Wage Base
The 6.2% Social Security portion applies only up to an annual ceiling called the wage base limit. For 2026, that ceiling is $184,500.4Social Security Administration. Maximum Taxable Earnings Once your year-to-date earnings hit that figure, Social Security withholding stops for the rest of the calendar year. The 1.45% Medicare portion has no cap and applies to every dollar you earn.1Internal Revenue Service. Topic No. 751, Social Security and Medicare Withholding Rates
If you hold two or more jobs in the same year, each employer withholds Social Security tax independently, and combined withholding can exceed the maximum. When that happens, you claim the excess as a credit on your federal income tax return. Spouses filing jointly must each calculate any overpayment separately.5Internal Revenue Service. Topic No. 608, Excess Social Security and RRTA Tax Withheld Check your W-2 totals before filing, especially if you switched jobs mid-year.
The Extra 0.9% for High Earners
An Additional Medicare Tax of 0.9% applies to wages above certain thresholds based on your filing status:6Internal Revenue Service. Questions and Answers for the Additional Medicare Tax
- Single or head of household: $200,000
- Married filing jointly: $250,000
- Married filing separately: $125,000
Your employer begins withholding the extra 0.9% once your wages with that employer pass $200,000 in a calendar year, regardless of your filing status. If your true threshold is different, you reconcile the difference at tax time on Form 8959.7Internal Revenue Service. Topic No. 560, Additional Medicare Tax Employers do not match this additional amount.
What Pay Is Subject to FICA
FICA applies to most compensation for work: salary, hourly wages, bonuses, and commissions all take the full 7.65% withholding. Cash tips are covered too. If you receive $20 or more in tips in a calendar month, you must report them to your employer in writing by the tenth of the following month so the employer can withhold the proper taxes.8Internal Revenue Service. Tips – Withholding and Reporting
Pre-tax retirement contributions are the counterintuitive part. Money you defer into a traditional 401(k) reduces your federal income tax withholding, but it does not reduce your FICA withholding. You still owe Social Security and Medicare tax on those deferrals.9Internal Revenue Service. Are Retirement Plan Contributions Subject to Withholding for FICA, Medicare, or Federal Income Tax Section 125 cafeteria plan benefits work the opposite way. Qualifying cafeteria plan benefits, like health insurance premiums or flexible spending account contributions, are generally exempt from both income tax and FICA.10Internal Revenue Service. FAQs for Government Entities Regarding Cafeteria Plans
Who Is Exempt
Most workers pay FICA. The exceptions are narrow.
Students Working at Their School
If you’re enrolled at least half-time at a college or university and work for that same institution, your wages may qualify for the student FICA exception. The work has to be tied to your course of study, and you can’t be classified as a career or professional employee. Once you become eligible for benefits like paid vacation, retirement plan contributions, or sick leave through the job, the exemption no longer applies.11Internal Revenue Service. Student FICA Exception
Members of Certain Religious Groups
Members of recognized religious sects that are conscientiously opposed to insurance benefits, such as the Amish and Mennonites, can apply for an exemption by filing Form 4029 with the Social Security Administration and permanently waiving all rights to Social Security and Medicare benefits. The religious group must have a continuous history of caring for its dependent members dating back to at least December 31, 1950.12Social Security Administration. Are Members of Religious Groups Exempt from Paying Social Security Taxes?
Some State and Local Government Employees
State and local government workers covered by a qualifying public retirement system may be exempt from Social Security tax, Medicare tax, or both. Whether the exemption applies depends on when they were hired and whether a Section 218 agreement exists between the state and the Social Security Administration. Employees hired after March 31, 1986 are generally subject to mandatory Medicare tax even when they’re exempt from Social Security.13Internal Revenue Service. State and Local Government Employees Social Security and Medicare Coverage
Nonresident Aliens on Certain Visas
Foreign nationals on F-1 or J-1 student visas are generally exempt from FICA for their first five calendar years in the United States. J-1 visa holders who are not students, such as researchers and professors, typically qualify for a two-year exemption. Once those periods end and the individual meets the substantial presence test, FICA withholding applies like it would for any other worker.
If You’re Self-Employed
Working for yourself means there’s no employer to split the bill. Under the Self-Employment Contributions Act, you owe both halves, combining to 15.3%: 12.4% for Social Security and 2.9% for Medicare.14Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes) You report the tax on Schedule SE and file it with your Form 1040.
The calculation isn’t 15.3% of your full net profit. You multiply net earnings by 92.35% first and apply the tax rate to that reduced figure.15Internal Revenue Service. Topic No. 554, Self-Employment Tax The adjustment approximates the tax break employees get by not paying FICA on their employer’s matching share. The 2026 Social Security wage base of $184,500 applies to those adjusted net earnings the same way it applies to W-2 wages.4Social Security Administration. Maximum Taxable Earnings If your net self-employment income crosses the Additional Medicare Tax thresholds, you owe the extra 0.9% on the amount above the limit.
You can deduct half of your self-employment tax when calculating adjusted gross income on your 1040.15Internal Revenue Service. Topic No. 554, Self-Employment Tax That doesn’t reduce the self-employment tax itself; it lowers the income figure used to compute your income tax. Because no employer is handling withholding, you’re generally required to make quarterly estimated tax payments to the IRS if your net self-employment earnings are $400 or more for the year.16Internal Revenue Service. Self-Employed Individuals Tax Center Missing those quarterly deadlines can trigger underpayment penalties even if you pay everything you owe when you file your annual return.