FICA takes 15.3% of your earnings, split between you and your employer
FICA (Federal Insurance Contributions Act) is two separate taxes combined into one payroll deduction. Social Security takes 12.4% of your wages, and Medicare takes 2.9%. That adds up to 15.3% total. Your employer pays half of this (7.65%), and the other half comes out of your paycheck (7.65%). You only see the employee half on your pay stub.
The Social Security portion stops once you hit a wage cap each year. In 2024, that cap is $168,600 — meaning once you earn that much, no more Social Security tax comes out for the rest of the year. Medicare tax has no cap and continues on all your earnings. If you are self-employed, you pay both halves yourself (15.3% total), though you can deduct half of it on your tax return.
These percentages have stayed the same since 1990. They do not change based on your income level, filing status, or number of dependents. Everyone pays the same rate.
Key Takeaways
- Social Security is 12.4% of wages up to $168,600 per year in 2024; Medicare is 2.9% with no wage limit.
- Employees see 7.65% deducted from their paycheck; employers pay the other 7.65%.
- Self-employed workers pay the full 15.3% but can deduct half on their tax return.
- The wage cap for Social Security changes each year based on inflation, but Medicare tax applies to all earnings.
How the Social Security wage cap works
Social Security tax only applies to wages below a certain threshold. In 2024, that threshold is $168,600. Once you earn $168,600 in a calendar year, your employer stops taking Social Security tax out of your remaining paychecks for that year.
This cap rises each January based on the national average wage index. It went up to $168,600 in 2024 from $160,200 in 2023. If you change jobs mid-year, each employer withholds Social Security tax independently up to the cap. This means if you earned $100,000 at Job A and then moved to Job B and earned $80,000, you would pay Social Security tax on both amounts even though your total is $180,000. You would then claim the overpayment on your tax return.
Medicare tax has no wage cap. It continues on every dollar you earn, no matter how high your income goes.
Why Medicare has no cap but Social Security does
Social Security is designed as an insurance program where benefits are tied to what you paid in. The program has a maximum benefit amount, so the government caps contributions to match. Medicare is structured differently — it is meant to cover everyone over 65 regardless of how much they earned, so there is no logical cap on contributions.
High earners pay more total Medicare tax than low earners because there is no limit. Someone earning $500,000 pays 2.9% on all of it. Someone earning $50,000 pays 2.9% on all of it. The dollar amounts differ, but the percentage stays the same.
Starting in 2013, an additional 0.9% Medicare tax was added for high earners. This extra tax applies to wages over $200,000 for single filers and $250,000 for married couples filing jointly. Your employer withholds this automatically if you cross the threshold.
Self-employed FICA rates and deductions
If you are self-employed, you pay both the employee and employer portions of FICA — 15.3% total on your net self-employment income. This is called self-employment tax. You calculate it on Schedule SE and report it when you file your tax return.
The good news is that you can deduct half of your self-employment tax on your tax return. This reduces your taxable income. So while you pay 15.3%, you effectively reduce your income tax burden by deducting 7.65% of it. The Social Security wage cap still applies — you only pay the 12.4% portion on self-employment income up to $168,600 in 2024.
Self-employed workers should set aside money throughout the year for FICA taxes because nothing is withheld automatically. Many use quarterly estimated tax payments to avoid a large bill at tax time.
FICA rates for employees versus employers
The breakdown of who pays what is straightforward. Employees see 7.65% withheld from each paycheck (or 8.55% if they earn over $200,000 and owe the additional Medicare tax). Employers pay an equal 7.65% on top of your salary. The employer's portion does not show on your pay stub but is part of your total compensation cost to them.
| Tax Component | Employee Rate | Employer Rate | Total | Wage Cap (2024) |
|---|---|---|---|---|
| Social Security | 6.2% | 6.2% | 12.4% | $168,600 |
| Medicare | 2.9% | 2.9% | 5.8% | None |
| Additional Medicare (high earners) | 0.9% | — | 0.9% | $200,000+ (single) |
| Total | 7.65%–8.55% | 7.65% | 15.3%–16.2% |
Some employers show both the employee and employer portions on a detailed pay stub so you can see the full picture of what FICA costs. Most pay stubs show only your half. The employer's contribution is tracked separately by the IRS but affects how much Social Security and Medicare credit you build toward future benefits.
What happens if you overpay FICA
Overpayment usually happens when you change jobs mid-year. If you worked at two jobs and paid Social Security tax on earnings that totaled more than $168,600, you overpaid. You claim the refund on your tax return using Form 1040 or Form 1040-SR.
The IRS will refund the overpayment when you file, or it will reduce the taxes you owe. You cannot claim the overpayment directly from your employer — it must go through your tax return. If you are owed a refund and you file early, you may receive it within weeks.
Overpayment on Medicare tax is rare because there is no cap. It can happen only if you had too much withheld by mistake, which your employer can correct if you report it.
Frequently Asked Questions
Does FICA tax come out before or after income tax?
FICA and income tax are separate deductions. Both come out of your paycheck. FICA is calculated first, then federal income tax is calculated on your remaining pay. Your pay stub will show them as separate line items.
Can I opt out of paying FICA?
No. FICA is mandatory for all employees and self-employed people with net earnings over $400. The only exceptions are certain religious groups and some government employees with their own pension systems, and those require specific approval from the IRS.
Why is my FICA tax different from my coworker's if we earn the same?
If you earn the same amount, your FICA rate should be identical. The difference might be timing — if one of you hit the Social Security wage cap earlier in the year, your later paychecks would show different amounts. Or one of you may be self-employed while the other is an employee.
Does FICA tax apply to all types of income?
FICA applies to wages and self-employment income. It does not apply to investment income, interest, dividends, or capital gains. It also does not apply to certain fringe benefits like health insurance premiums your employer pays on your behalf.
What if I earn income from multiple jobs?
Each employer withholds FICA based on what you earn at that job. If your combined earnings exceed the Social Security wage cap, you will overpay and can claim a refund on your tax return. Medicare tax will be withheld on all earnings from all jobs.