FICA takes 7.65% of your gross pay, split between Social Security and Medicare

FICA (Federal Insurance Contributions Act) removes 6.2% for Social Security and 1.45% for Medicare from every paycheck. Your employer matches that amount, so the total cost to fund these programs is 15.3%, but you only see half of it deducted from your pay. If you're self-employed, you pay both halves yourself — 15.3% total on your net business income.

The Social Security portion (6.2%) only applies to income up to a cap, which changes each year. In 2024, that cap is $168,600, meaning once you earn that much in a year, Social Security tax stops coming out of your paychecks for the rest of the year. Medicare tax (1.45%) has no cap — it applies to all your wages, no matter how much you earn. High earners also pay an additional 0.9% Medicare tax on income above $200,000 (single) or $250,000 (married filing jointly).

Key Takeaways

  • FICA deductions are 7.65% of your gross pay: 6.2% for Social Security and 1.45% for Medicare.
  • The Social Security portion stops once you hit the annual wage cap (which varies by year), but Medicare tax continues on all income.
  • If you're self-employed, you pay the full 15.3% because you cover both the employee and employer share.
  • Your FICA taxes fund your future Social Security benefits and Medicare may be able to access, not general government spending.

Why the Social Security cap matters for high earners

If you earn $168,600 or more in 2024, you'll stop paying Social Security tax partway through the year. Once you hit that threshold, no more 6.2% comes out for Social Security — though Medicare tax keeps going. This is why high earners see their FICA percentage drop in the later months of the year.

The cap exists because Social Security benefits are calculated based on your highest 35 years of earnings, with a maximum benefit amount. The system was designed so that very high earners don't pay into a program that won't pay them proportionally higher benefits. The cap increases most years to keep pace with wage growth — it was $160,200 in 2023 and will likely be higher in 2025.

How FICA changes if you're self-employed

Self-employed people pay self-employment tax, which is FICA's equivalent for business owners. You pay 15.3% on your net business income (what's left after business expenses), not your gross revenue. That 15.3% breaks down the same way: 12.4% for Social Security (up to the annual cap) and 2.9% for Medicare.

The difference is that you're paying both the employee and employer portions yourself. As a trade-off, you can deduct half of your self-employment tax when you file your income tax return, which reduces your taxable income. You still owe the full amount, but the deduction lowers your federal income tax bill.

What happens to your FICA money

FICA taxes don't go into a general government fund — they're earmarked for specific programs. Social Security tax funds retirement, disability, and survivor benefits. Medicare tax funds hospital insurance (Part A) and is combined with other revenue to support the broader Medicare system. These aren't savings accounts in your name; they're pay-as-you-go programs where current workers' taxes pay current beneficiaries' benefits.

Your FICA contributions do determine your future benefits, though. Social Security calculates your benefit based on your highest 35 years of earnings and the age you claim. Medicare may be able to access at 65 is tied to having paid into the system for at least 10 years (40 quarters). If you haven't worked long enough or earned enough, you may not be may have access to to full benefits.

FICA deductions on your pay stub

Your pay stub should show FICA broken into two line items: one for Social Security (labeled "OASDI" or "Social Security") and one for Medicare. Some pay stubs also show an additional Medicare tax line if you're a high earner. These are separate from federal income tax withholding, which is calculated differently and based on the W-4 form you filled out when hired.

If your pay stub doesn't clearly label FICA deductions, ask your payroll department to explain the breakdown. You should be able to see exactly how much went to Social Security, how much to Medicare, and whether you've hit the Social Security wage cap for the year. This information is also reported on your W-2 form at the end of the year.

How FICA interacts with other deductions

FICA is calculated on your gross pay — the full amount you earn before any deductions. This means FICA comes out even if you contribute to a 401(k), health insurance, or other pre-tax benefits. Those deductions reduce your taxable income for federal income tax purposes, but they don't reduce the amount subject to FICA.

Some benefits, like health savings accounts (HSAs) and dependent care accounts, also don't reduce FICA. The only common deductions that lower FICA are certain retirement contributions for self-employed people (like the self-employment tax deduction itself) and a few narrow situations involving non-resident aliens or religious exemptions.

Frequently Asked Questions

Why do I pay FICA if I'm already paying income tax?

FICA and income tax are two separate systems funding different things. Income tax goes to general government operations. FICA specifically funds Social Security and Medicare, which you're may have access to to use later based on your contributions. You pay both because they serve different purposes.

What if I work multiple jobs — do I pay FICA on both?

Yes, you pay FICA on all wages from all jobs. However, if your combined earnings exceed the Social Security wage cap, you may overpay Social Security tax. You can claim a credit for the overpayment when you file your tax return, but you'll need to track it across all employers.

Do I get FICA back if I don't use Social Security or Medicare?

No. FICA is mandatory for all employees and self-employed people, and you cannot opt out. Even if you never claim Social Security or Medicare, you've paid into the system. Your contributions fund current beneficiaries, and your future may be able to access is based on your payment history.

Does FICA apply to bonuses and overtime?

Yes. FICA applies to all wages, including bonuses, overtime pay, and commissions. The same 7.65% (or 15.3% if self-employed) comes out of these payments, subject to the Social Security wage cap if applicable.