FICA Taxes Explained: Social Security and Medicare

Two lines on almost every American pay stub — Social Security and Medicare — are often lumped together under one name: FICA, the Federal Insurance Contributions Act. Unlike income tax, FICA has no brackets, no standard deduction, and (for Medicare) no upper limit, which is why it quietly takes a bigger bite of a typical paycheck than federal income tax does. This guide explains the 2026 rates, the wage cap, the extra tax at higher incomes, your employer's matching share, and what the money actually funds, with the arithmetic worked in full.

The two parts of FICA

As an employee, you pay FICA at a combined rate of 7.65% of your wages, made up of two separate taxes:

The Social Security part has a ceiling called the wage base — $184,500 for 2026. Once your wages from an employer pass that amount during the year, Social Security tax stops for the rest of the year (Medicare continues). That puts a hard cap on the employee Social Security tax for 2026: $184,500 × 6.2% = $11,439. High earners often notice their take-home pay rise late in the year for exactly this reason: the 6.2% line simply disappears once the cap is reached.

The Additional Medicare Tax

There is a second Medicare layer at higher incomes: an Additional Medicare Tax of 0.9%. The tax itself applies to wages above $200,000 for single filers and above $250,000 for married couples filing jointly. Your employer, however, does not know your filing status or your spouse's income, so the withholding rule is simpler: an employer must start withholding the extra 0.9% in the pay period when your wages from that employer pass $200,000 in the calendar year, whatever your status. If too much or too little was withheld — a joint filer whose combined income stays under $250,000, for example — the difference is settled on the annual tax return. Unlike the regular Medicare tax, the 0.9% additional tax is not matched by your employer.

Your employer pays the other half

FICA is split between you and your employer. Your employer pays the same again on top of your wages: 6.2% for Social Security (up to the same wage base) and 1.45% for Medicare — another 7.65%. In total, 15.3% of a typical employee's wages goes to FICA, even though only half of it appears as a deduction on the pay stub. The employer half is a cost of employing you that never passes through your gross pay at all.

If you are self-employed

Self-employed workers pay both halves themselves under the self-employment tax, at the same combined 15.3% rate — 12.4% for Social Security up to the wage base and 2.9% for Medicare — plus the 0.9% Additional Medicare Tax at the same income thresholds. Because there is no employer to withhold it, the tax is calculated on the annual return and usually paid through quarterly estimated payments. In recognition of the fact that employees never pay income tax on their employer's half, self-employed filers can deduct the employer-equivalent portion of the tax when working out their income tax — but the full 15.3% payroll amount itself is still owed.

What FICA actually funds

FICA taxes are earmarked contributions to specific insurance programmes rather than general government revenue. The Social Security portion funds the federal Old-Age, Survivors, and Disability Insurance programme — retirement benefits, payments to surviving family members, and disability benefits for workers who can no longer work. The Medicare portion funds Medicare's hospital insurance, which helps cover hospital care for people aged 65 and over and certain younger people with disabilities. Your future eligibility and benefit levels are tied to the wages these taxes were paid on, which is why the Social Security Administration keeps an earnings record for every worker — and why checking that record for mistakes is worthwhile.

Why there is no standard deduction for FICA

The standard deduction reduces income tax only. FICA is calculated on your gross wages from the first dollar, which produces a result that surprises many people: a worker whose income is low enough to owe no federal income tax at all still pays the full 7.65% FICA on every paycheck. A handful of pre-tax items do change the FICA wage figure — health insurance premiums paid through an employer's cafeteria plan generally reduce wages for both income tax and FICA — but the most familiar one does not: traditional 401(k) contributions escape income tax while remaining fully subject to FICA.

Worked example: a $60,000 salary

• Social Security: $60,000 × 6.2% = $3,720
• Medicare: $60,000 × 1.45% = $870
• Your total FICA for the year: $3,720 + $870 = $4,590 — about $382.50 per monthly paycheck
• Your employer pays another $4,590, so $9,180 reaches the programmes in total

Compare this with the same salary's federal income tax in our brackets guide — $5,020 after the standard deduction — and you can see how close the "smaller" payroll tax runs to the income tax itself.

Key takeaways

• Employees pay FICA at 7.65%: 6.2% Social Security on wages up to $184,500 (2026) and 1.45% Medicare on all wages.
• An extra 0.9% Additional Medicare Tax applies above $200,000 single / $250,000 joint; employers begin withholding it once your pay passes $200,000.
• Your employer matches the regular 7.65%, and the self-employed pay both halves at 15.3%.
• FICA is charged on gross wages with no standard deduction — on a $60,000 salary it comes to $4,590 a year.

See the FICA lines worked out for your own pay in our Paycheck Calculator, which applies the wage base and Medicare rules alongside income tax and state tax.

Keep exploring

• How Paycheck Tax Is Calculated, Step by Step
• 2026 Federal Income Tax Brackets, Explained
• The 2026 Standard Deduction, Explained
• Gross Pay vs Net Pay: What Comes Between Them

Put the numbers to work: Paycheck Calculator · No Tax on Overtime Calculator · No Tax on Tips Calculator

Last updated: 2026-10-31. Tax parameters: 2026 (IRS Rev. Proc. 2025-32; SSA wage base; Tax Foundation state tables).