FICA takes 15.3% of your wages, split between you and your employer

FICA is two separate payroll taxes: Social Security and Medicare. Together, they remove 15.3% of your gross pay. Your employer pays half (7.65%) and you pay the other half (7.65%), which appears as deductions on your paycheck. If you are self-employed, you pay the full 15.3% yourself.

The rate breaks down this way: Social Security takes 12.4% of your wages (6.2% from you, 6.2% from your employer), and Medicare takes 2.9% (1.45% from each). There is also an additional Medicare tax of 0.9% that applies only to wages above a certain threshold, which only you pay — your employer does not match it.

These percentages have been set by federal law and do not change year to year. What does change is the wage cap for Social Security, which means once you earn above a certain amount in a single year, Social Security tax stops coming out of your paycheck. Medicare has no wage cap, so it continues on all earnings.

Key Takeaways

  • Social Security is 12.4% of your wages (you pay 6.2%, your employer pays 6.2%), and Medicare is 2.9% (split equally at 1.45% each).
  • The Social Security portion stops once you reach the annual wage cap, which changes each year; Medicare continues on all earnings with no cap.
  • If you earn above $200,000 as a single filer (or $250,000 married filing jointly), an extra 0.9% Medicare tax applies to the amount over that threshold, and only you pay it.
  • Self-employed workers pay the full 15.3% because they are both employee and employer, though they can deduct half of it on their tax return.

How the Social Security portion works

Social Security tax is 12.4% of your wages, but only up to a wage cap. In 2024, that cap is $168,600, meaning once you earn that much in a calendar year, no more Social Security tax comes out of your paycheck for the rest of that year. The cap increases most years based on wage growth in the economy.

This is why high earners pay a smaller percentage of their total income to Social Security than lower-wage workers do. Someone earning $50,000 pays 6.2% on all of it. Someone earning $500,000 pays 6.2% only on the first $168,600, then nothing on the remaining $331,400.

Your employer also stops matching your Social Security tax once you hit the cap. If you work for multiple employers in the same year and together earn above the cap, you may overpay Social Security tax on your own side. You can claim the overpayment as a credit on your tax return.

How the Medicare portion works

Medicare tax is 2.9% of your wages with no upper limit. You pay 1.45% and your employer pays 1.45%, and this continues on every dollar you earn, no matter how much you make in a year.

On top of the standard 2.9%, there is an additional Medicare tax of 0.9% that kicks in once your wages exceed $200,000 in a year (if you file as single), $250,000 (if married filing jointly), or $125,000 (if married filing separately). This extra tax applies only to the wages above those thresholds, and only you pay it — your employer does not match it. Your employer is responsible for withholding it from your paycheck once you cross the threshold.

What self-employed workers pay

If you are self-employed, you pay both the employee and employer portions of FICA, which totals 15.3%. This is called self-employment tax. You calculate it on your net business income (your revenue minus business expenses) using Schedule SE when you file your taxes.

The Social Security portion (12.4%) still has the same wage cap as employees — $168,600 in 2024. The Medicare portion (2.9%) has no cap, and the additional 0.9% Medicare tax applies at the same income thresholds as for employees.

The tax code gives self-employed workers one break: you can deduct half of your self-employment tax as a business expense on your tax return. This reduces your taxable income but does not reduce the amount of FICA tax you owe.

How FICA differs from income tax withholding

FICA and federal income tax withholding are separate. FICA is a fixed percentage that goes toward Social Security and Medicare. Income tax withholding is based on the W-4 form you fill out with your employer and depends on your filing status, number of dependents, and other factors.

You can see both on your pay stub. FICA appears as "Social Security" and "Medicare" line items. Federal income tax withholding appears as "Federal Income Tax" or "FIT". State income tax, if your state has one, is a third separate line.

Unlike FICA, which is a tax you owe, income tax withholding is an estimate. If too much is withheld, you get a refund when you file your return. If too little is withheld, you owe money. FICA withholding does not work this way — the amount withheld is the amount you owe, with no adjustment at tax time (except for the self-employment overpayment scenario described above).

Why FICA rates stay the same

Congress set the FICA tax rates in 1983 for Social Security and 1965 for Medicare, and they have remained unchanged since. The rates are written into federal law, and changing them requires an act of Congress. This is different from the wage cap for Social Security, which adjusts automatically each year based on average wage growth.

Because the rates are fixed by law, you will see the same 6.2% Social Security and 1.45% Medicare deductions on every paycheck, regardless of economic conditions or changes in government. The only variation is the wage cap for Social Security and the income thresholds for the additional Medicare tax.

Frequently Asked Questions

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

FICA is a mandatory payroll tax, not an optional insurance program. You pay it whether or not you ever collect benefits. Social Security and Medicare are funded through current worker contributions, not individual accounts. Even if you move abroad or pass away before retirement, the taxes you paid go into the trust funds that support current beneficiaries.

Does FICA apply to all types of income?

FICA applies to wages and self-employment income. It does not apply to investment income, rental income, or most other sources. If you have a job and also earn money from freelance work or a side business, you pay FICA on both, though you calculate self-employment tax separately on the business income.

Can I opt out of FICA?

No. FICA is mandatory for all workers in the United States, with very limited exceptions for certain religious groups and some government employees hired before specific dates. If you are employed or self-employed, you must pay FICA taxes.

What happens to the FICA money I pay?

FICA taxes go into two trust funds: the Social Security Trust Fund and the Medicare Trust Fund. The money is used to pay current benefits to retirees, disabled workers, and their families (Social Security) and to cover hospital insurance and some medical costs for people 65 and older (Medicare). It is not held in an individual account with your name on it.

If I have two jobs, do I pay FICA on both?

Yes. You pay FICA on wages from every job. For Social Security, you may overpay if your combined wages exceed the annual cap, but you can claim the overpayment on your tax return. For Medicare, you pay on all wages with no cap, and the additional 0.9% Medicare tax applies once your total wages cross the threshold.