FICA is two separate taxes taken from your paycheck every pay period

FICA stands for Federal Insurance Contributions Act. It funds Social Security and Medicare. Your employer takes FICA taxes directly from your paycheck — you do not pay them separately. Two taxes make up FICA: Social Security tax and Medicare tax. Each one has its own rate and its own income limit.

The amount taken depends on how much you earn in a single pay period. If you earn more in one week, more FICA comes out that week. The rate stays the same, but the dollar amount changes with your income.

You will see FICA listed on your pay stub as "FICA" or broken into "Social Security" and "Medicare" or "OASDI" (Old-Age, Survivors, and Disability Insurance) and "HI" (Hospital Insurance). Different employers format it differently, but the calculation is the same.

Key Takeaways

  • Social Security tax is 6.2% of your gross pay, up to a yearly income cap that changes each year.
  • Medicare tax is 1.45% of all your gross pay with no income limit, plus an additional 0.9% if you earn over $200,000 per year as a single filer.
  • Your employer also pays an equal amount of FICA tax on your behalf — that money does not come from your paycheck.
  • FICA taxes fund your future Social Security retirement benefits and Medicare coverage at age 65, not general government spending.
  • Self-employed people pay both the employee and employer portion of FICA, which is called self-employment tax.

How Social Security tax is calculated

Social Security tax is 6.2% of your gross pay — the amount you earn before taxes and deductions. Gross pay includes your hourly wage or salary, bonuses, and overtime. It does not include 401(k) contributions or health insurance premiums you pay pre-tax.

There is a yearly income cap. Once you earn that amount in a calendar year, Social Security tax stops coming out of your paycheck for the rest of that year. The cap changes every year. For example, if the cap is $168,600 and you earn $170,000 in a year, you pay Social Security tax only on the first $168,600. The income cap applies to each job separately — if you work two jobs, each one calculates Social Security tax independently until you hit the cap across both jobs combined.

Here is a concrete example: if you earn $2,000 in a single paycheck and the yearly cap has not been reached, Social Security tax is $2,000 × 0.062 = $124. If you have already hit the yearly cap earlier in the year, $0 comes out for Social Security that paycheck.

How Medicare tax is calculated

Medicare tax has two parts. The first part is 1.45% of all your gross pay with no yearly income limit. You pay this on every dollar you earn, for the entire year, no matter how much you make.

The second part is an additional 0.9% Medicare tax on income over a threshold. For single filers, the threshold is $200,000 per year. For married couples filing jointly, it is $250,000. For married filing separately, it is $125,000. Once your income crosses that threshold in a calendar year, an extra 0.9% comes out on all income above it for the rest of the year.

Example: if you are single and earn $210,000 in a year, you pay 1.45% on all $210,000, plus an additional 0.9% on the $10,000 above $200,000. That extra 0.9% is $10,000 × 0.009 = $90.

What your employer pays and why it matters

Your employer pays an equal amount of FICA tax on your behalf. You do not see this money come out of your paycheck — it is a separate cost to the employer. For Social Security, they pay 6.2%. For Medicare, they pay 1.45%, plus the 0.9% additional Medicare tax if you earn over the threshold.

This employer contribution counts toward your Social Security and Medicare record. When you eventually claim Social Security retirement benefits or enroll in Medicare, the government counts both the employee and employer portions of FICA you paid throughout your working years. The employer contribution is real money that funds your future benefits, even though you never see it on your paycheck.

If you are self-employed, you pay both portions yourself. This is called self-employment tax. You pay 12.4% for Social Security (the combined employee and employer rate) and 2.9% for Medicare (plus 0.9% additional if you earn over the threshold). Self-employed people report this on Schedule SE when they file taxes.

How to read FICA on your pay stub

Your pay stub shows gross pay at the top, then lists deductions. FICA taxes appear in the deductions section. Some pay stubs show one line for "FICA" with a single dollar amount. Others break it into separate lines: "Social Security" or "OASDI" and "Medicare" or "HI".

To verify the calculation is correct, take your gross pay for that paycheck, multiply by 0.062 for Social Security (if you have not hit the yearly cap), and multiply by 0.0145 for Medicare. The dollar amounts on your pay stub should match. If you earn over $200,000 and it is late in the year, also check for the additional 0.9% Medicare line.

If the numbers do not match, ask your payroll department. Common reasons for differences include: you have already hit the Social Security income cap earlier in the year, you are contributing to a pre-tax 401(k) or health insurance plan (which reduces gross pay for FICA purposes in some cases), or your employer uses a different pay period than you expected.

FICA and your Social Security record

Every dollar of FICA you pay is recorded under your Social Security number. The Social Security Administration tracks your earnings history year by year. When you turn 62, 67, or 70 and claim retirement benefits, they use your 35 highest-earning years to calculate your monthly benefit amount. The more you paid in FICA, the higher your benefit.

You can view your own Social Security earnings record online at ssa.gov by creating a my Social Security account. The record shows how much you paid in Social Security tax each year and estimates what your retirement benefit will be at different ages. Checking this record once a year helps you catch errors early — if an employer failed to report your earnings, you can ask Social Security to correct it while you still have time.

FICA also funds disability and survivor benefits. If you become unable to work before retirement age, you may be able to claim Social Security Disability Insurance (SSDI) based on your FICA contributions. If you die, your family members may receive survivor benefits. The amount depends on how much you paid in FICA during your working years.

What happens if you change jobs or work multiple jobs

Each employer calculates FICA independently based on what you earn at that job. If you work two part-time jobs, each employer takes Social Security tax at 6.2% until you hit the yearly income cap across both jobs combined.

Here is where it gets important: if you earn $90,000 at Job A and $90,000 at Job B in the same year, you will overpay Social Security tax. Job A will take 6.2% on all $90,000. Job B will also take 6.2% on all $90,000, even though your combined income is $180,000 and the yearly cap might be $168,600. You will have paid Social Security tax on $12,000 more than the cap allows.

When you file your tax return, you can claim a credit for the overpayment. The IRS will refund the extra Social Security tax you paid. You do not have to do anything special — the tax software or your tax preparer will calculate it automatically.

Frequently Asked Questions

Why do I pay FICA if I might not collect Social Security?

FICA funds more than just retirement. It also funds Medicare at age 65, disability benefits if you cannot work, and survivor benefits for your family if you die. Even if you never claim retirement benefits, your FICA contributions may support you or your family through one of these programs. Additionally, most workers do collect Social Security — the average person who reaches age 65 collects for 15 to 20 years.

Can I opt out of paying FICA?

No. FICA is mandatory for all employees and self-employed people. The only exceptions are certain religious groups that have filed for exemption, some government employees hired before specific dates, and nonresident aliens on certain visa types. If you are a regular employee, you cannot opt out.

Does FICA come out before or after income tax?

FICA comes out of your gross pay before federal income tax is calculated. Your pay stub shows gross pay, then FICA deductions, then federal income tax (which is calculated on a smaller amount). This is why your federal income tax withholding appears lower than it would if it were calculated on your full gross pay.

What if my employer did not take out FICA?

Report it to your employer's payroll department immediately. They are legally required to withhold and pay FICA. If they refuse or go out of business without paying, contact the IRS at 1-800-829-1040. You may still owe self-employment tax on that income when you file your tax return, but the IRS can pursue the employer for the unpaid portion.

How much FICA will I pay this year?

Multiply your expected annual gross income by 0.062 for Social Security (up to the yearly income cap) and by 0.0145 for Medicare. If you earn over $200,000, add 0.009 on the amount above the threshold. For example, a single person earning $60,000 pays roughly $3,720 in Social Security tax and $870 in Medicare tax, for a total of $4,590 in FICA.