What is FICA
FICA refers to the Social Security and Medicare taxes deducted from every paycheck — employees pay 7.65% of their wages, employers match that amount, and self-employed workers pay both halves as the self-employment tax.
FICA stands for the Federal Insurance Contributions Act, the law that mandates payroll taxes to fund two major federal insurance programs: Social Security and Medicare. If you're an employee, you see FICA deducted from every paycheck. Your employer pays an equal matching amount on top of your wages on your behalf.
FICA is not income tax — it's separate from the federal (and state) income tax withheld under your W-4. Both income taxes and FICA taxes appear as line-item deductions on your pay stub.
FICA Tax Rates (2025)
| Tax | Employee Rate | Employer Rate | Total |
|---|---|---|---|
| Social Security | 6.2% | 6.2% | 12.4% |
| Medicare | 1.45% | 1.45% | 2.9% |
| FICA Total | 7.65% | 7.65% | 15.3% |
Social Security Wage Base
The 6.2% Social Security tax only applies to wages up to the annual wage base, which is adjusted each year for wage growth. For 2025, that limit is $176,100. Wages above this amount are not subject to the Social Security portion of FICA, though Medicare continues to apply on all wages.
Additional Medicare Surtax
An additional 0.9% Medicare tax applies on wages (or self-employment income) above:
- $200,000 for single filers
- $250,000 for married filing jointly
Employers are required to withhold this additional tax once an employee's wages exceed $200,000 in the year, regardless of the employer doesn't know the employee's total household income or filing status. Any over- or under-withholding is reconciled on the employee's tax return.
Self-Employment Tax: FICA for the Self-Employed
Self-employed individuals — freelancers, sole proprietors, independent contractors — don't have an employer to share FICA. They pay the self-employment tax, which covers both the employee and employer halves:
- 15.3% on net self-employment earnings up to the Social Security wage base
- 2.9% on earnings above the wage base (Medicare only)
- 3.8% above the Additional Medicare Tax threshold
However, self-employed filers get two partially offsetting tax breaks:
- They can deduct 50% of self-employment tax as an above-the-line deduction, reducing AGI
- The 15.3% rate is applied to 92.35% of net earnings (not 100%), mimicking the fact that the employee portion of FICA is calculated on wages before the employer match is added
See self-employment tax for a detailed breakdown.
FICA and Your Pay Stub
On your pay stub, Social Security and Medicare taxes may be listed as:
- FICA - Social Security (or OASDI — Old Age, Survivors, and Disability Insurance)
- FICA - Medicare (or MHI — Medicare Hospital Insurance)
Verify these amounts against your gross pay multiplied by the respective rates. Errors in FICA withholding, while uncommon, do occur and should be reported to payroll.
What FICA Taxes Fund
Social Security taxes fund the OASDI trust funds, which pay:
- Retirement benefits (starting as early as age 62, full benefits at 67 for those born in 1960 or later)
- Disability benefits (SSDI)
- Survivor benefits for spouses and children of deceased workers
Medicare taxes fund:
- Medicare Part A (hospital insurance) — premium-free for most people at 65 who have paid into the system for 40 quarters (10 years)
- A portion of the Medicare Advantage and supplemental insurance programs
Both programs use your lifetime earnings history of FICA contributions to calculate your eventual benefits — so higher earnings (and thus higher FICA contributions) over your career generally mean higher Social Security and Medicare benefits in retirement.