FICA taxes are paid by both employees and employers, split down the middle

You pay FICA taxes on your wages, and your employer pays an equal amount on your behalf. The total is 15.3 percent of your gross pay — you see 7.65 percent taken from your paycheck, and your employer sends in another 7.65 percent directly to the federal government. This split applies to almost all jobs in the United States, whether you work full-time, part-time, or seasonal.

The 7.65 percent you pay breaks into two parts: 6.2 percent for Social Security and 1.45 percent for Medicare. Your employer pays the same percentages on the same split. If you are self-employed, you pay both halves yourself — 15.3 percent total — though you can deduct half of it when you file taxes.

FICA stands for Federal Insurance Contributions Act. The money funds Social Security retirement benefits, disability benefits, survivor benefits, and Medicare hospital insurance. These are not general tax funds; they go into dedicated trust accounts that pay out specific benefits.

Key Takeaways

  • Employees pay 7.65 percent of gross wages in FICA taxes, and employers pay an equal 7.65 percent on top of your salary.
  • The 7.65 percent splits into 6.2 percent for Social Security and 1.45 percent for Medicare, with employers matching both portions.
  • Self-employed people pay the full 15.3 percent themselves, but can deduct half of it as a business expense on their tax return.
  • FICA taxes have a wage cap for Social Security only — in 2024, you stop paying the 6.2 percent Social Security portion once you earn $168,600, but Medicare taxes continue on all income.

How the employee portion appears on your paycheck

Your employer withholds FICA taxes before you receive your paycheck. You will see two line items on your pay stub: Social Security tax and Medicare tax. The Social Security line shows 6.2 percent of your gross pay, and the Medicare line shows 1.45 percent. Together they reduce your take-home pay by 7.65 percent.

This withholding happens automatically — you do not need to do anything to make it occur. Your employer calculates it based on your gross wages and sends the money to the IRS on a schedule set by federal law. The amount withheld is reported to you on your W-2 form at the end of the year, and it counts as a payment toward your annual tax liability.

If you work multiple jobs, each employer withholds FICA taxes separately. This means you could pay more than the Social Security wage cap allows if your combined earnings exceed the threshold. When that happens, you can claim a refund of the overpayment on your tax return.

How the employer portion works

Your employer pays FICA taxes on your behalf as a cost of employment, separate from your salary. This 7.65 percent is not deducted from your paycheck — it is an additional expense the employer bears. From the employer's perspective, if they pay you $50,000 per year, they also send approximately $3,825 to the federal government in FICA taxes for that position.

Employers remit these taxes quarterly or more frequently, depending on the size of the payroll. The IRS sets the schedule, and employers who miss deadlines face penalties. Small employers may remit monthly; large employers may remit multiple times per week. The employer's portion is reported on Form 941, the quarterly employment tax return.

The employer portion does not reduce your taxable income as an employee, but it does reduce the employer's business income. Employers can deduct FICA taxes they pay as a business expense, which lowers their taxable profit.

The wage cap for Social Security only

Social Security taxes have a wage cap that changes each year. In 2024, you stop paying the 6.2 percent Social Security portion once your earnings reach $168,600 for the year. After that threshold, no more Social Security tax is withheld from your paycheck, even if you earn more money.

Medicare taxes have no wage cap. You pay 1.45 percent on all wages, no matter how much you earn. However, if your income exceeds certain thresholds — $200,000 for single filers, $250,000 for married filing jointly — an additional 0.9 percent Medicare tax applies to the excess. This additional tax is withheld by your employer and goes toward Medicare funding.

The Social Security wage cap exists because Social Security benefits are tied to your earnings history, and benefits have a maximum amount. Once you have paid into the system on the maximum taxable wage, additional contributions would not increase your future benefit. The Medicare program has no such cap because Medicare benefits are not earnings-based.

Who does not pay FICA taxes

Most workers in the United States pay FICA taxes, but some groups are exempt. Federal government employees hired before 1984 pay into a different retirement system called CSRS and do not pay Social Security tax, though they do pay Medicare tax. Federal employees hired after 1983 pay both Social Security and Medicare taxes.

Some state and local government employees do not pay Social Security tax if they are covered by a government pension plan, though they may pay Medicare tax. Railroad workers pay into a separate system called the Railroad Retirement Tax Act instead of FICA. Certain religious groups that have filed for exemption do not pay FICA taxes.

Students employed by the school or university where they are enrolled may be exempt from Social Security and Medicare taxes on those wages. Nonresident aliens on certain visa types do not pay Social Security tax on wages, though they do pay Medicare tax. These exemptions are narrow and require specific conditions to be met.

Self-employed FICA taxes

If you are self-employed, you pay both the employee and employer portions of FICA taxes yourself. This is called self-employment tax, and it totals 15.3 percent of your net business income. You calculate it on Schedule SE and report it when you file your tax return.

The self-employment tax rate is higher than what a regular employee pays because you are covering both halves. However, you can deduct half of your self-employment tax as a business expense, which reduces your taxable income. This deduction partially offsets the burden of paying both portions.

Self-employed people also have the same Social Security wage cap as employees. Once your net self-employment income reaches the annual threshold, you stop paying the 6.2 percent Social Security portion on additional income. Medicare self-employment tax continues on all net income, plus the additional 0.9 percent Medicare tax if your income exceeds the thresholds.

What happens to the money you pay

FICA taxes you pay go into two trust funds: the Social Security Trust Fund and the Medicare Trust Fund. These are not general government accounts — they are dedicated funds that can only be used for specific purposes. Social Security taxes fund retirement benefits, disability benefits for workers under 65, and survivor benefits for families of deceased workers.

Medicare taxes fund hospital insurance (Part A), which covers inpatient hospital stays, skilled nursing facility care, and some home health services. The money does not sit in an account waiting for you to retire; it pays current beneficiaries. When you retire, future workers' FICA taxes will fund your benefits.

The amount you receive in Social Security retirement benefits is based on your earnings history and the age at which you claim. The more you earn over your working years, the higher your benefit, up to a maximum. Medicare benefits are not based on earnings; they are available to everyone 65 and older, regardless of how much they paid in taxes.

Frequently Asked Questions

Do I pay FICA taxes on tips?

Yes. Tips are considered wages for FICA purposes. Your employer withholds FICA taxes on tips you report, and you should report all tips to your employer so the correct amount is withheld. If you do not report tips, you still owe FICA taxes on them when you file your return.

What if my employer does not withhold FICA taxes?

Contact your employer immediately and ask them to correct the withholding. If they refuse or go out of business, you may still owe FICA taxes on your wages. You can report the issue to the IRS or your state labor department, but you remain responsible for paying the taxes owed.

Can I opt out of paying FICA taxes?

No, with very narrow exceptions. FICA taxes are mandatory for almost all workers. The only way to avoid them is to fall into one of the specific exempt categories, such as certain government employees or members of recognized religious groups that have filed for exemption with the IRS.

Do I pay FICA taxes on unemployment benefits?

No. Unemployment benefits are not subject to FICA taxes. However, they are subject to federal income tax withholding if you request it. You can choose to have income tax withheld from your unemployment check, but FICA taxes do not apply.

How do I know if I paid too much FICA tax?

If you worked multiple jobs and your combined earnings exceeded the Social Security wage cap, you may have overpaid. Compare your W-2 forms to see the total Social Security tax withheld. If it exceeds the maximum for the year, you can claim the overpayment as a refund on your tax return.