FICA tax is calculated as a percentage of your gross wages, taken out before you see your paycheck
FICA tax comes out of your pay in two parts: Social Security at 6.2% and Medicare at 1.45%. Your employer matches both amounts. The calculation is straightforward — the payroll system multiplies your gross pay (before deductions) by each rate and subtracts the result from what you receive.
The Social Security portion stops once you hit an annual wage cap. In 2024, that cap is $168,600, meaning once you earn that much in a calendar year, no more Social Security tax comes out. Medicare tax has no cap and continues on all wages. Self-employed people pay both the employee and employer portions — 12.4% for Social Security and 2.9% for Medicare — but can deduct half of it on their tax return.
Key Takeaways
- Social Security tax is 6.2% of your gross pay up to $168,600 per year in 2024; Medicare is 1.45% with no wage limit.
- Your employer withholds both amounts from your paycheck and also pays an equal amount on your behalf.
- Once you reach the Social Security wage cap in a calendar year, that tax stops coming out of your remaining paychecks.
- Self-employed workers pay both the employee and employer share, totaling 15.3% for Social Security and Medicare combined.
How the Social Security portion works
Social Security tax is 6.2% of your gross wages, calculated on each paycheck. If you earn $2,000 in a biweekly paycheck, the Social Security tax withheld is $124. This continues throughout the year until your cumulative wages reach the annual cap.
The cap changes each year based on wage growth. Once you cross it, your employer stops withholding Social Security tax on subsequent paychecks for the rest of that calendar year. If you work for multiple employers in the same year, each one withholds Social Security tax independently up to the cap. This can result in overpayment, which you recover as a credit when you file your tax return — you claim it on Form 1040.
How the Medicare portion works
Medicare tax is 1.45% of all your gross wages with no annual cap. Unlike Social Security, this tax continues on every dollar you earn, no matter how much you make. On a $2,000 paycheck, Medicare tax is $29.
High earners pay an additional 0.9% Medicare tax on wages above $200,000 (if single) or $250,000 (if married filing jointly). This additional tax is withheld by your employer once you cross the threshold in a given year. The combined Medicare rate for high earners becomes 2.35% on earnings above the threshold.
What happens if you work multiple jobs
Each employer calculates and withholds FICA tax independently based on the wages they pay you. If you earn $1,500 from Job A and $1,500 from Job B in the same pay period, each employer withholds FICA on their $1,500 portion. Neither knows about the other job.
This matters most for Social Security tax. If your combined wages from all jobs exceed the annual cap, you will overpay Social Security tax. For example, if you earn $100,000 at Job A and $80,000 at Job B, both employers will withhold Social Security tax on their full amounts, even though your total exceeds the cap. You recover the overpayment when you file your tax return by claiming the excess as a credit on Form 1040.
Self-employed FICA calculations
Self-employed people pay self-employment tax, which covers both the employee and employer portions of FICA. The rate is 15.3% total: 12.4% for Social Security (up to the annual wage cap) and 2.9% for Medicare (no cap).
You calculate self-employment tax on your net profit from self-employment, not your gross revenue. Net profit is what remains after you subtract business expenses. You pay self-employment tax when you file your annual tax return using Schedule SE. You can deduct half of your self-employment tax payment as a business expense on your tax return, which reduces your taxable income.
How to read your pay stub
Your pay stub shows FICA withholding in separate line items. Look for "Social Security Tax" or "OASDI" (Old-Age, Survivors, and Disability Insurance) and "Medicare Tax" or "HI" (Hospital Insurance). The amount withheld should match 6.2% of your gross pay for Social Security and 1.45% for Medicare, unless you have reached the Social Security wage cap for the year.
Your pay stub also shows year-to-date totals for each tax. Use these to track whether you are approaching the Social Security cap. Once the year-to-date Social Security tax stops increasing from paycheck to paycheck, you have reached the cap and no more will be withheld for the rest of that year.
Frequently Asked Questions
What is the 2024 Social Security wage cap?
The 2024 cap is $168,600. Once your cumulative wages reach this amount in a calendar year, no more Social Security tax is withheld. The cap increases most years based on national wage growth.
Can I avoid paying FICA tax?
No. FICA tax is mandatory for all employees and self-employed people with net earnings above $400. There are no deductions or exemptions that remove the requirement, though certain religious groups may request exemption from Social Security.
Do I get FICA tax back when I file my return?
You do not get it back as a refund, but you may recover an overpayment if you worked multiple jobs and exceeded the Social Security wage cap. Claim the excess on Form 1040 as a credit against your tax liability.
Why does my Medicare tax seem higher than 1.45%?
If you earn over $200,000 (single) or $250,000 (married filing jointly), an additional 0.9% Medicare tax applies to wages above the threshold. This brings your total Medicare rate to 2.35% on high earnings.
How is FICA tax different from income tax?
FICA funds Social Security and Medicare and has fixed rates and a wage cap for Social Security. Income tax funds general government operations, has variable rates based on your tax bracket, and applies to all income with no cap.