FICA is the tax that funds Social Security and Medicare
FICA stands for Federal Insurance Contributions Act. It is a payroll tax that your employer takes from your wages every pay period. The money goes into two separate programs: Social Security and Medicare. You will see FICA listed on your pay stub as two line items — one for Social Security tax and one for Medicare tax.
FICA is not optional, and it is not a choice between programs. If you work as an employee, your employer is required by law to withhold FICA from your paycheck and send it to the federal government. Self-employed people pay FICA themselves, though they pay both the employee and employer portions combined.
The amount withheld depends on how much you earn, not on your age, family size, or how much you have already paid in. FICA continues as long as you work, even if you are already receiving Social Security or Medicare benefits.
Key Takeaways
- FICA has two parts: 6.2% of your wages goes to Social Security, and 1.45% goes to Medicare, taken directly from your paycheck.
- Your employer also pays an equal amount into FICA on your behalf, though you do not see this on your pay stub.
- Social Security FICA stops once you reach the annual wage cap (which changes each year), but Medicare FICA continues on all earnings.
- FICA is separate from federal income tax withholding — you pay both, and they fund different programs.
- The amount you paid into FICA over your working years determines how much Social Security you receive later, not how much you currently earn.
How much FICA comes out of your paycheck
The Social Security portion of FICA is 6.2% of your gross wages. The Medicare portion is 1.45% of your gross wages. Together, that is 7.65% of what you earn before taxes and deductions.
Your employer also pays 7.65% into FICA on your behalf — the same rates. This employer contribution does not reduce your paycheck, but it is part of your total compensation cost to the employer.
The Social Security tax stops once you reach a wage cap in a given year. In 2024, that cap was $168,600 — meaning if you earn more than that in a year, you stop paying the 6.2% Social Security tax on income above that amount. The Medicare tax has no cap and continues on all earnings, no matter how high.
Why Social Security and Medicare withholding are separate
Social Security and Medicare are two different federal programs with different rules, different funding sources, and different purposes. Keeping the FICA tax split into two line items makes it clear how much of your paycheck funds each one.
Social Security is an insurance program that pays retirement benefits, disability benefits, and survivor benefits to workers and their families. Medicare is a health insurance program for people 65 and older, and for some younger people with disabilities or end-stage renal disease. The money you pay into each program is tracked separately, and your future benefits from each one are calculated independently.
When you look at your pay stub, you will see "Social Security tax" and "Medicare tax" listed separately so you can see exactly how much of your earnings go to each program.
FICA versus federal income tax withholding
FICA and federal income tax are two separate withholdings from your paycheck, and they fund different things. Many people confuse them because they both come out automatically.
FICA is a fixed percentage (7.65% total) that goes to Social Security and Medicare. Federal income tax withholding is based on your tax bracket, filing status, and the W-4 form you fill out with your employer. Federal income tax goes into the general Treasury and funds federal government operations — defense, infrastructure, federal agencies, and so on.
You pay both. They appear as separate line items on your pay stub. Neither one is optional if you are an employee, and both are withheld before you see your paycheck.
What happens to the money you pay into FICA
The Social Security portion of FICA goes into the Social Security Trust Fund. The money is used to pay current Social Security benefits to retirees, disabled workers, and survivors. If you are working now, your FICA payments are funding benefits for people who are retired or disabled today — not being saved in an account with your name on it.
The Medicare portion goes into the Medicare Trust Fund and pays for hospital insurance (Part A) and some of the costs of medical insurance (Part B). Like Social Security, Medicare operates on a pay-as-you-go system where current workers fund current beneficiaries.
Your FICA payment record is tracked by Social Security under your Social Security number. When you reach retirement age or become disabled, Social Security uses your earnings history — the amount you paid into FICA over your working years — to calculate your benefit amount. Higher lifetime earnings mean a higher benefit, but the relationship is not dollar-for-dollar.
FICA for self-employed people
If you are self-employed, you pay FICA yourself rather than having an employer withhold it. You pay both the employee portion (7.65%) and the employer portion (7.65%), for a total of 15.3% of your net self-employment income.
Self-employed people report this on Schedule SE (Self-Employment Tax) when they file their federal tax return. You can deduct half of your self-employment tax as a business expense on your return, which reduces your taxable income slightly, but you still owe the full 15.3%.
The wage cap for Social Security applies to self-employed people the same way it applies to employees. Once your net self-employment income reaches the cap in a given year, you stop paying the 6.2% Social Security portion on income above that amount, but you continue paying the 1.45% Medicare portion on all earnings.
FICA withholding if you work multiple jobs
If you work more than one job, each employer withholds FICA based on the wages they pay you. The Social Security tax continues to be withheld at 6.2% from each job until your combined earnings across all jobs reach the annual wage cap.
This can result in overpayment of Social Security tax if your combined earnings exceed the cap. For example, if you earn $100,000 at one job and $80,000 at another, you will have paid Social Security tax on $180,000 total, even though the cap was $168,600 in 2024. You can claim a credit for the overpayment when you file your federal tax return.
Medicare tax has no cap, so there is no overpayment issue with Medicare withholding across multiple jobs.
Frequently Asked Questions
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 received a formal exemption from the IRS, and some non-citizen visa holders in specific situations. For the vast majority of workers, FICA withholding is required by law.
Does FICA withholding count toward my federal income tax?
No. FICA and federal income tax are separate. FICA funds Social Security and Medicare. Federal income tax funds general government operations. You owe both, and both are withheld from your paycheck, but neither one reduces what you owe for the other.
What if I did not pay FICA for some years?
Years with no earnings or no FICA payment count as zero-earnings years in your Social Security record. Social Security calculates your benefit using your 35 highest-earning years, so some zero years may lower your average. You can view your earnings record on ssa.gov to see what has been reported under your name.
Do I get FICA back if I leave the country?
Generally, no. FICA is a tax, not a savings account. However, some countries have agreements with the United States that allow workers to receive Social Security benefits even if they move abroad. The rules depend on your citizenship and the country you move to. Contact Social Security directly for your specific situation.
Why does my FICA withholding change from paycheck to paycheck?
FICA withholding should not change unless your wages change. If you get a raise, bonus, or different hours, your FICA amount will adjust because it is a percentage of your gross pay. If you notice unexplained changes, ask your payroll department to review your withholding.