Federal FICA is the money your employer withholds from each paycheck for Social Security and Medicare

FICA stands for the Federal Insurance Contributions Act. It is a payroll tax that funds two programs: Social Security and Medicare. Your employer is required by law to take FICA out of your paycheck before you receive it. The money goes directly to the federal government, not to your employer.

FICA has two parts. The Social Security portion funds retirement, disability, and survivor benefits. The Medicare portion funds hospital insurance and medical coverage for people 65 and older, plus some younger people with disabilities. Both parts are taken from your paycheck automatically if you work as an employee.

The amount withheld depends on your gross pay — the total amount you earn before any deductions. FICA is calculated as a percentage of your gross income, and the rate is set by federal law. Your employer matches the amount you pay, meaning they contribute an equal sum on your behalf, though you do not see that part on your paycheck.

Key Takeaways

  • FICA withholds 6.2% of your gross pay for Social Security and 1.45% for Medicare, totaling 7.65% from your paycheck.
  • Your employer contributes an additional 7.65% on your behalf, though this does not appear on your paycheck.
  • FICA is mandatory for all employees and is separate from federal income tax withholding.
  • Self-employed people pay both the employee and employer portions, totaling 15.3%, through self-employment tax.
  • You can view your lifetime FICA contributions and estimated benefits by creating an account at ssa.gov.

How much FICA is withheld from your paycheck

The Social Security portion is 6.2% of your gross pay, up to a wage cap set each year. In 2024, the cap is $168,600, meaning once you earn that amount in a calendar year, no more Social Security tax is withheld. The Medicare portion is 1.45% of all your gross pay with no cap — it continues regardless of how much you earn.

Together, these two parts total 7.65% of your gross income. This amount is deducted before you see your paycheck. If you earn $2,000 in a pay period, FICA withholds approximately $153. Your employer then contributes another $153 on your behalf to the Social Security and Medicare trust funds.

High earners pay an additional Medicare tax of 0.9% on income above $200,000 per year (if single) or $250,000 (if married filing jointly). This extra tax is withheld only from the employee's pay, not matched by the employer. It was added in 2013 as part of the Affordable Care Act.

The difference between FICA and federal income tax

FICA and federal income tax are two separate withholdings that appear on your paycheck stub. Federal income tax is withheld based on the W-4 form you complete when you start a job — the amount depends on your filing status, number of dependents, and other income. FICA, by contrast, is a fixed percentage with no variation based on personal circumstances.

Federal income tax goes to the Internal Revenue Service and funds general government operations. FICA goes to the Social Security Administration and Centers for Medicare and Medicaid Services and funds those specific programs. You can adjust how much federal income tax is withheld by updating your W-4, but you cannot reduce FICA withholding — it is mandatory for all employees.

On your paycheck stub, you will see these listed separately. FICA may appear as "Social Security" and "Medicare" or as "FICA" with the two portions broken out. Federal income tax usually appears as "FIT" or "Federal Income Tax Withholding."

FICA for self-employed people

If you are self-employed, you pay both the employee and employer portions of FICA yourself. This is called self-employment tax and totals 15.3% — 12.4% for Social Security and 2.9% for Medicare. You pay this when you file your annual tax return using Schedule SE.

Self-employed people calculate self-employment tax on their net business income after deducting business expenses. You can deduct half of your self-employment tax as a business expense when calculating your adjusted gross income, which reduces your overall tax burden slightly. However, you still pay the full 15.3% amount.

The Social Security portion of self-employment tax is also subject to the annual wage cap. Once your net self-employment income reaches $168,600 in 2024, the 12.4% Social Security tax stops, but the 2.9% Medicare tax continues on all remaining income.

Where FICA money goes and what it funds

Social Security taxes fund retirement benefits for workers 62 and older, disability benefits for workers under 65 who cannot work, and survivor benefits for the families of deceased workers. When you retire, the amount you receive is based partly on how much you paid into Social Security over your working years.

Medicare taxes fund hospital insurance (Part A), which covers inpatient hospital stays, skilled nursing facility care, and hospice. Medicare Part A is funded entirely by the Medicare portion of FICA. Parts B and D (medical insurance and prescription drug coverage) are funded through general tax revenue and beneficiary premiums, not FICA.

Both Social Security and Medicare operate as trust funds. Current workers' FICA contributions pay benefits to current retirees and beneficiaries. The Social Security Administration and Centers for Medicare and Medicaid Services manage these funds and issue payments monthly.

How to track your FICA contributions

The Social Security Administration maintains a record of all FICA taxes you have paid throughout your working life. You can view this record by creating a my Social Security account at ssa.gov. The account shows your earnings history year by year and an estimate of your retirement, disability, and survivor benefits.

Your employer also reports your FICA withholding on your W-2 form at the end of each year. The W-2 shows Social Security wages and Medicare wages separately, along with the taxes withheld. You should receive your W-2 by January 31 each year.

If you notice an error in your earnings record — such as wages that were not reported or reported under the wrong name — you can contact the Social Security Administration to correct it. Errors can affect your future benefit amount, so it is worth checking your record periodically, especially after changing jobs.

FICA withholding for special situations

Certain groups are exempt from FICA withholding. Members of some religious groups that object to insurance on religious grounds may request exemption from both Social Security and Medicare taxes. Students employed by the school or university where they are enrolled may be exempt from Social Security tax on those wages. Nonresident aliens on certain visa types may have different FICA rules depending on their visa status and country of origin.

If you work for a state or local government, you may not pay FICA on those wages if your employer has opted out of the Social Security system. Instead, you may pay into a separate government pension system. However, most government employees do pay FICA.

If you have multiple jobs, FICA is withheld from each paycheck separately. This means you could pay more than the annual Social Security wage cap if your combined earnings from all jobs exceed the cap. You can claim a credit for excess Social Security tax paid when you file your tax return.

Frequently Asked Questions

Can I opt out of FICA withholding?

No, FICA withholding is mandatory for all employees. Only members of certain religious groups with approved exemptions and a few other narrow categories can avoid it. Most workers have no option to reduce or stop FICA withholding.

What happens if my employer does not withhold FICA?

Your employer is legally required to withhold FICA and remit it to the federal government. If they do not, you can report them to the Department of Labor or the IRS. You may still owe self-employment tax on those wages when you file your tax return.

Do I get FICA taxes back when I file my tax return?

No, FICA is not refundable. However, if you overpaid Social Security tax due to multiple jobs, you can claim a credit on your tax return. Federal income tax withholding can result in a refund if you overpaid, but FICA cannot.

How much Social Security will I receive based on my FICA payments?

Your benefit amount depends on your age when you claim, your earnings history, and your life expectancy. The Social Security Administration estimates your benefit on your my Social Security account. You can view estimates for claiming at 62, full retirement age, or 70 to compare options.

Is FICA withheld on tips and bonuses?

Yes, FICA is withheld on all compensation, including tips, bonuses, and overtime pay. Tips must be reported to your employer, and FICA is calculated on the total including tips. Bonuses are treated as regular wages for FICA purposes.