FICA taxes are calculated as a percentage of your gross wages, split between Social Security and Medicare

FICA stands for Federal Insurance Contributions Act. Your employer withholds a fixed percentage from each paycheck: 6.2% for Social Security and 1.45% for Medicare, totaling 7.65%. Your employer then matches that amount and sends both portions to the IRS. If you're self-employed, you pay both the employee and employer portions yourself, which comes to 15.3% of your net self-employment income.

The calculation is straightforward for most wage earners because your employer does it automatically. For self-employed people, the math is slightly more complex because you calculate it yourself on your tax return using Schedule SE. Either way, the percentages and the income thresholds that trigger them stay the same across all states.

Key Takeaways

  • Employees pay 6.2% for Social Security and 1.45% for Medicare; employers match both amounts.
  • Self-employed people pay 15.3% total on net self-employment income, calculated on Schedule SE.
  • Social Security tax only applies to income up to an annual cap, which changes each year; Medicare tax has no cap.
  • Your employer withholds FICA automatically, so you see the deduction on your pay stub each period.
  • If you have multiple jobs, you may overpay Social Security tax and can claim a refund on your tax return.

How the Social Security portion is calculated

Social Security tax is 6.2% of your gross wages, but only up to a maximum income threshold. That threshold changes annually—it was $168,600 in 2024, for example. Once your wages reach that cap in a calendar year, your employer stops withholding Social Security tax for the rest of that year. Medicare tax, by contrast, has no income cap and continues on every dollar you earn.

The reason for the cap is how Social Security benefits are structured: they replace a percentage of your pre-retirement income up to a certain level, so there's no benefit to collecting taxes on income above that threshold. Your employer's payroll system tracks your year-to-date earnings and automatically stops the withholding when you cross the cap.

How the Medicare portion is calculated

Medicare tax is 1.45% of your gross wages with no income limit. Unlike Social Security, you pay this on every dollar you earn, no matter how much you make in a year. There is an additional 0.9% Medicare tax that applies to high earners—wages over $200,000 for single filers, $250,000 for married filing jointly—but this is less common and your employer will only withhold it if your income crosses that threshold.

The base 1.45% goes to the Hospital Insurance Trust Fund, which covers hospital and inpatient care under Medicare Part A. The additional 0.9% also goes to Medicare but is treated as income tax rather than FICA for Social Security purposes.

Calculating FICA if you're self-employed

Self-employed people report their business income on Schedule C and then calculate self-employment tax on Schedule SE. You pay tax on your net self-employment income—that is, your business income minus business expenses and a deduction for half of your self-employment tax itself. The rate is 15.3% total: 12.4% for Social Security (the employee and employer portions combined) and 2.9% for Medicare.

The Social Security portion still has an annual income cap. In 2024, you only pay the 12.4% Social Security tax on net self-employment income up to $168,600. The 2.9% Medicare portion applies to all net self-employment income with no cap, plus the additional 0.9% if your total income exceeds the high-earner threshold.

You report self-employment tax on your Form 1040 when you file your annual return. Unlike wage earners who have taxes withheld throughout the year, self-employed people often need to make quarterly estimated tax payments to avoid penalties. Your tax software or a tax professional can help you calculate what you owe each quarter.

What happens if you have multiple jobs

If you work more than one job in the same year, each employer withholds Social Security tax independently based on the wages they pay you. This can result in overpaying Social Security tax if your combined wages exceed the annual cap. For example, if you earn $100,000 at one job and $80,000 at another, both employers will withhold the full 6.2% Social Security tax, even though your combined income is $180,000—above the $168,600 cap.

You can recover the overpayment when you file your tax return. On Form 1040, you'll report all your wages and FICA withholdings, and the IRS will calculate how much you overpaid and refund it to you. You don't need to do anything special to claim it; the IRS catches it automatically when processing your return.

Reading your pay stub to verify FICA calculations

Your pay stub shows FICA withholdings in separate line items: one for Social Security (labeled "OASDI" or "Social Security") and one for Medicare. Check that the Social Security withholding stops once you've earned above the annual cap—if you're near the end of the year and still seeing Social Security tax withheld after crossing the threshold, contact your payroll department to verify they have your year-to-date earnings correct.

The Medicare line should appear on every pay stub with no annual cutoff. If you're a high earner, you may also see an "Additional Medicare Tax" line once your year-to-date wages exceed $200,000 (or $250,000 if married filing jointly). Compare the percentages to the rates above: Social Security should be 6.2%, Medicare 1.45%, and additional Medicare 0.9% if applicable. Small rounding differences are normal, but the percentages should match.

How FICA differs from income tax withholding

FICA and federal income tax withholding are separate deductions on your pay stub. FICA funds Social Security and Medicare and has fixed rates and income caps. Federal income tax withholding is based on the W-4 form you complete with your employer and varies depending on your filing status, dependents, and other income. You can adjust your W-4 to change how much income tax is withheld, but you cannot change your FICA withholding—it's set by law.

Some people confuse the two because they appear together on the same pay stub. FICA is mandatory and the same for everyone at the same income level. Income tax withholding is customizable and depends on your personal situation. Understanding the difference helps you know which deduction you can control and which one you cannot.

Frequently Asked Questions

Why does my FICA withholding stop partway through the year?

Your employer stops withholding Social Security tax once your year-to-date wages reach the annual cap—$168,600 in 2024. Medicare tax continues on every dollar. This is normal and not an error. If you have multiple jobs, you may overpay and can claim a refund when you file your tax return.

Can I opt out of paying FICA?

No. FICA withholding is mandatory for all wage earners and self-employed people. The only exception is certain religious groups that have received an IRS exemption, which requires a formal application process and approval. For everyone else, FICA taxes are non-negotiable.

How do I know if I overpaid Social Security tax?

If your combined wages from all jobs in one year exceed the Social Security cap, you've overpaid. When you file your tax return and report all your W-2s, the IRS calculates the overpayment automatically. You'll receive a refund of the excess Social Security tax withheld. You don't need to claim it separately; it appears on your return.

What's the difference between FICA and self-employment tax?

FICA is the tax withheld from your paycheck as a wage earner. Self-employment tax is what self-employed people pay on Schedule SE, covering both the employee and employer portions. The rates are different—self-employment tax is 15.3% versus 7.65% for employees—because self-employed people pay both halves themselves.

Does FICA withholding count toward my income tax refund?

No. FICA and federal income tax are separate. FICA funds Social Security and Medicare. Federal income tax withholding funds general government operations. Your refund or balance due is calculated based only on your federal income tax withholding and your actual tax liability, not FICA.