← Glossary Finance · Personal Finance

FICA Taxes

$$\text{FICA} = (\text{Wages} \times 6.2\%) + (\text{Wages} \times 1.45\%)$$

Use the FICA Taxes Calculator → Try the FICA Taxes Quiz →

What is FICA Taxes?

FICA (Federal Insurance Contributions Act) taxes are mandatory payroll taxes withheld from every US W-2 paycheck. The total employee rate is 7.65%: 6.2% for Social Security and 1.45% for Medicare. Social Security is capped - once wages exceed the annual wage base ($176,100 in 2025), no further Social Security tax is withheld for the rest of the year. Medicare has no cap; the 1.45% applies to all wages. High earners also owe an Additional Medicare Tax of 0.9% on wages above $200,000 for single filers ($250,000 for married filing jointly), paid only by the employee.

Employers pay a matching 7.65% on top of each employee's wages - 6.2% Social Security and 1.45% Medicare. This means the combined FICA contribution on a paycheck is 15.3%. From an employer's perspective, a $100,000 salary actually costs $107,650 before any other benefits. Unlike income tax, which varies by bracket and deductions, FICA is a flat percentage applied mechanically to wages.

Self-employed individuals pay both halves of FICA themselves as the "self-employment tax" of 15.3% on net self-employment income. To offset the extra burden, the IRS allows them to deduct half of the self-employment tax (7.65%) from gross income when calculating federal income tax. FICA does not apply to distributions from S-corporations, partnerships, or pass-through entities - only to wages and salaries.

When to use FICA Taxes

Use FICA estimates when comparing job offers by true take-home value, calculating the real employer cost of a hire (wages plus 7.65% FICA match), or planning self-employment income where you owe the full 15.3% self-employment tax. Also use it when evaluating whether to defer income into pre-tax accounts - traditional 401(k) and HSA contributions reduce FICA taxable wages as well as income tax.

Worked examples for FICA Taxes

This table quickly gives you the overview you need to understand FICA Taxes and its most important comparisons.

Gross wages	Social Security (6.2%)	Medicare (1.45%)	Total FICA	Employer match
$50,000	$3,100	$725	$3,825	$3,825
$100,000	$6,200	$1,450	$7,650	$7,650
$176,100 (wage base)	$10,918	$2,553	$13,471	$13,471
$200,000	$10,918	$2,900	$13,818	$13,818
$250,000 (single, Addl. Medicare)	$10,918	$3,625 + $450*	$14,993*	$13,818

Common pitfalls

* The Additional Medicare Tax of 0.9% on wages above $200,000 (single) is paid only by the employee - the employer does not match it. Many paycheck calculators omit this line item. The second common mistake is treating the Social Security wage base as fixed: it increases annually. Using the prior year's cap overstates Social Security withholding for high earners. Finally, note that FICA is not reduced by the standard deduction or itemized deductions - it applies to gross wages before any income tax adjustments.

Frequently asked questions about FICA Taxes

What does FICA stand for, and what does it fund?

FICA stands for the Federal Insurance Contributions Act. The Social Security portion (6.2%) funds retirement, disability, and survivor benefits administered by the Social Security Administration. The Medicare portion (1.45%) funds hospital insurance for people 65 and older and certain disabled individuals.

Do employers pay FICA in addition to your salary?

Yes. Employers pay a matching 7.65% on top of every employee's wages - separate from and in addition to the gross salary. A $100,000 salaried employee costs the employer at least $107,650 in FICA alone, before health insurance, retirement contributions, or other benefits.

Can I avoid paying FICA?

For most W-2 employees, no. FICA is mandatory and withheld automatically. However, some limited exemptions exist: student workers employed by their own university, members of certain religious groups who have formally opted out, and non-resident aliens on specific visa types may be partially or fully exempt. Self-employed individuals cannot avoid the tax but can deduct half of it.

Test your knowledge

Quiz: how well do you know FICA taxes?

5 questions · ~2 min

1. What is the total FICA employee rate, and how is it divided between Social Security and Medicare?

ℹ The definition states the total employee FICA rate is 7.65%: 6.2% for Social Security and 1.45% for Medicare. Social Security is capped at the annual wage base ($176,100 in 2025); Medicare has no cap.

2. From the worked examples table, what is the total employee FICA withholding on $100,000 in gross wages?

ℹ The examples table shows $7,650 total FICA for $100,000 in gross wages ($6,200 Social Security + $1,450 Medicare). The employer matches this same $7,650, making the combined FICA contribution $15,300 on that salary.

3. According to the definition, what self-employment tax rate do self-employed individuals pay, and what tax relief is available?

ℹ The definition states that self-employed individuals pay the full 15.3% self-employment tax (both halves). To offset the extra burden, the IRS allows them to deduct half (7.65%) from gross income when calculating federal income tax.

4. What does the pitfalls section warn about the Additional Medicare Tax of 0.9%?

ℹ The pitfalls section explicitly warns that the 0.9% Additional Medicare Tax on wages above $200,000 (single) is paid only by the employee - the employer does not match it. The threshold for married filing jointly is $250,000, not $200,000.

5. According to the FAQ, which workers may qualify for a FICA exemption?

ℹ The FAQ states that while most W-2 employees cannot avoid FICA, some limited exemptions exist: student workers at their own university, members of certain religious groups who have formally opted out, and non-resident aliens on specific visa types. Self-employed individuals still owe FICA as self-employment tax.