What Is FICA Tax? Social Security and Medicare Explained
"FICA" shows up on every American pay stub, right below federal withholding — but most people have no idea what it stands for, what it funds, or how the math works. Here's the full picture.
In this guide:
- What FICA Stands For and Funds
- The Social Security Tax Rate and Wage Base
- The Medicare Tax Rate (and the Additional 0.9%)
- FICA for the Self-Employed
- FICA vs. Income Tax
- Common FICA Questions
- How much FICA you pay at different salaries
- The Social Security wage base over time
- Additional Medicare Tax: how it really works
- Credits and benefits FICA buys
- Who does not pay FICA
- If too much Social Security was withheld
- Self-employment tax: FICA for freelancers
- FICA on tips, bonuses and fringe benefits
- How today's FICA rates came about
- Your employer's share of FICA
- Checking FICA on your pay stub
- FICA for household employees and part-time work
- Does FICA count toward my tax refund?
- FICA at a glance
- Frequently Asked Questions
1. What FICA Stands For and Funds
FICA stands for the Federal Insurance Contributions Act, the 1935 law that created the payroll tax funding two of America's largest social insurance programs:
- Social Security — retirement benefits, disability insurance, and survivor benefits
- Medicare — federal health insurance primarily for people 65 and older
Unlike income tax, which funds general government spending, FICA is specifically earmarked for these two programs.
2. The Social Security Tax Rate and Wage Base
Social Security tax is 6.2% of your wages, matched by an equal 6.2% from your employer (so 12.4% total goes toward the program, even though only half shows up on your pay stub).
Critically, Social Security tax only applies up to an annual limit called the wage base — $184,500 for 2026. Once your year-to-date wages cross that threshold, Social Security withholding stops for the rest of the year.
| Component | Employee Rate | Wage Cap |
|---|---|---|
| Social Security | 6.2% | $184,500 |
| Medicare | 1.45% | None |
| Additional Medicare | 0.9% | Above $200,000 (single) |
3. The Medicare Tax Rate (and the Additional 0.9%)
Medicare tax is a flat 1.45% of all your wages — there's no cap, so high earners pay Medicare tax on every dollar they make. On top of that, an Additional Medicare Tax of 0.9% kicks in on wages above $200,000 for single filers (or $250,000 for married filing jointly), bringing the employee-side Medicare rate to 2.35% on income above that threshold.
4. FICA for the Self-Employed
If you're a freelancer, contractor, or small business owner, there's no employer to split the bill — you're responsible for both the employee and employer portions, a combined 15.3% (12.4% Social Security + 2.9% Medicare), calculated on 92.35% of your net self-employment income. This is called self-employment tax. The good news: half of what you pay is deductible from your taxable income. Use our self-employment tax calculator to estimate your own liability.
5. FICA vs. Income Tax
People often lump FICA and income tax together, but they work very differently:
- Income tax is progressive (higher earners pay a higher rate) and depends on your filing status, deductions, and credits.
- FICA is a flat rate that applies the same way to almost everyone, regardless of filing status or dependents, up to the Social Security wage cap.
- Income tax withholding is an estimate reconciled at tax filing time. FICA is not reconciled — what's withheld is what's paid, permanently.
6. Common FICA Questions
Can I opt out of FICA?
Almost never. A small number of groups are exempt, but the vast majority of U.S. workers cannot opt out.
Do I get FICA back if I overpay?
If you work multiple jobs in a year and your combined wages push your Social Security withholding above the annual maximum, you can claim the excess back as a credit on your federal tax return.
7. How much FICA you pay at different salaries
Employee FICA in 2026: 6.2% Social Security on wages up to $184,500, 1.45% Medicare on all wages, and 0.9% Additional Medicare Tax withheld on wages over $200,000.
| Wages | Social Security | Medicare | Additional Medicare | Total FICA | Effective FICA rate |
|---|---|---|---|---|---|
| $30,000 | $1,860 | $435 | $0 | $2,295 | 7.65% |
| $60,000 | $3,720 | $870 | $0 | $4,590 | 7.65% |
| $100,000 | $6,200 | $1,450 | $0 | $7,650 | 7.65% |
| $184,500 | $11,439 | $2,675 | $0 | $14,114 | 7.65% |
| $250,000 | $11,439 | $3,625 | $450 | $15,514 | 6.21% |
| $400,000 | $11,439 | $5,800 | $1,800 | $19,039 | 4.76% |
Because Social Security stops at the wage base, FICA takes a smaller share of pay for very high earners. Your employer pays a matching 6.2% and 1.45% on top, though not the Additional Medicare Tax.
8. The Social Security wage base over time
| Year | Wage base | Maximum employee Social Security tax |
|---|---|---|
| 2024 | $168,600 | $10,453.20 |
| 2025 | $176,100 | $10,918.20 |
| 2026 | $184,500 | $11,439.00 |
The wage base rises each year with average wages. Once your year-to-date pay passes it, Social Security stops being withheld for the rest of the year and your paychecks get larger until January.
9. Additional Medicare Tax: how it really works
Employers must withhold the extra 0.9% on wages above $200,000 paid to you in a calendar year, regardless of your filing status. Your actual liability is based on your combined income and filing status: the thresholds are $200,000 for single filers, $250,000 for married couples filing jointly and $125,000 for married filing separately. A married couple each earning $150,000 has no withholding at work but owes 0.9% on $50,000 when they file Form 8959; a single earner at $220,000 with a spouse who does not work has tax withheld on $20,000 that may come back as a credit.
10. Credits and benefits FICA buys
Paying Social Security tax earns credits toward retirement, disability and survivor benefits. In 2026 you earn one credit for each $1,890 of covered earnings, up to four credits a year, so $7,560 of wages earns the full four. Most people need 40 credits, about ten years of work, to qualify for retirement benefits. Medicare tax funds hospital insurance (Part A), which you generally get premium-free at 65 after paying Medicare tax for at least 40 quarters.
11. Who does not pay FICA
- Students working for the school, college or university where they are enrolled and regularly attending classes.
- Some state and local government employees covered by a public retirement system instead of Social Security; most still pay Medicare.
- Certain nonresident aliens on F, J, M or Q visas for work allowed by their visa status, generally for their first years in the U.S.
- Members of some religious groups opposed to insurance, who are approved for an exemption on Form 4029; employees qualify only if their employer is also an exempt member.
- Children under 18 working for a parent's sole proprietorship or partnership owned only by the parents.
12. If too much Social Security was withheld
Each employer withholds Social Security up to the wage base without knowing about your other jobs. If you worked two jobs in 2026 and your combined wages were above $184,500, you may have paid more than $11,439. Claim the excess as a credit on Schedule 3 of Form 1040. If a single employer withheld too much, that employer must refund it; you cannot claim it on your return.
13. Self-employment tax: FICA for freelancers
Self-employed people pay both halves of FICA through self-employment tax: 15.3% (12.4% Social Security plus 2.9% Medicare) on 92.35% of net earnings, with the Social Security part limited to the $184,500 wage base. On $50,000 of net profit, that is $50,000 x 92.35% x 15.3% = $7,064.77. Half of it, $3,532.39, is deductible when calculating income tax. Self-employment tax is paid with quarterly estimated taxes and calculated on Schedule SE. If you also have a W-2 job, your wages count toward the wage base first. The self-employment tax calculator runs the numbers for you.
14. FICA on tips, bonuses and fringe benefits
FICA applies to almost every form of pay: tips you report to your employer, bonuses, commissions, paid time off, severance and most taxable fringe benefits, such as personal use of a company car. Some benefits are exempt from FICA, including employer health insurance, Section 125 cafeteria plan premiums, HSA contributions through payroll and qualified transit benefits. Traditional 401(k) contributions are not exempt: they avoid income tax now but are still subject to Social Security and Medicare.
15. How today's FICA rates came about
Social Security payroll tax began in 1937 at 1% each for workers and employers on the first $3,000 of wages. Medicare's hospital insurance tax was added in 1966. The combined employee rate reached today's 7.65% in 1990: 6.2% for Social Security and 1.45% for Medicare. The Medicare wage cap was removed in 1994, and the 0.9% Additional Medicare Tax on high earners took effect in 2013. Since then, the rates have stayed the same while the Social Security wage base has risen with average wages each year.
16. Your employer's share of FICA
For every dollar of wages, your employer pays its own 6.2% Social Security and 1.45% Medicare, so the total cost of FICA on your pay is 15.3%, up to the wage base. The employer share does not appear as a deduction on your pay stub, but it is part of what it costs to employ you, which is one reason a contractor's rate needs to be higher than an employee's wage. Employers also pay federal and state unemployment taxes, which are not deducted from your pay in most states.
17. Checking FICA on your pay stub
To check your stub, multiply your Social Security wages for the period by 6.2% and your Medicare wages by 1.45%. Both wage figures are usually your gross pay minus any Section 125 deductions, such as pre-tax health premiums; 401(k) contributions are not subtracted. If the amounts are off by more than a few cents, or if Social Security is still being withheld after your year-to-date wages pass $184,500 at one employer, ask payroll to review it.
18. FICA for household employees and part-time work
FICA applies to part-time and seasonal jobs from the first dollar of wages; there is no minimum for regular employees. Household employees, such as nannies or caregivers paid directly by a family, are covered once the family pays them more than an annual threshold set by the IRS, after which the family must withhold and pay FICA. Election workers and some students working for their schools have their own thresholds or exemptions.
19. Does FICA count toward my tax refund?
No. Your refund or balance due is based on federal income tax only. Social Security and Medicare withheld from your paychecks are final payments to those programs and are not reconciled on your return, with two exceptions: excess Social Security from two or more employers, which you claim as a credit, and the Additional Medicare Tax, which is settled on Form 8959.
20. FICA at a glance
- Employee rate: 7.65% (6.2% Social Security + 1.45% Medicare).
- Employer rate: another 7.65% on top of your pay.
- Self-employed: 15.3% on 92.35% of net earnings, half deductible.
- 2026 Social Security wage base: $184,500; maximum employee Social Security tax $11,439.
- Additional Medicare Tax: 0.9% on wages above $200,000 (withholding threshold).
Frequently Asked Questions
What is the FICA tax rate for 2026?
7.65% for employees: 6.2% Social Security on wages up to $184,500 and 1.45% Medicare on all wages, plus 0.9% on wages over $200,000.
What is the maximum Social Security tax in 2026?
$11,439 for an employee, which is 6.2% of the $184,500 wage base.
Is FICA refundable?
Generally no, except excess Social Security from multiple employers, which you claim as a credit on your tax return.
Do I pay FICA on 401(k) contributions?
Yes. Traditional 401(k) contributions reduce income tax but are still subject to Social Security and Medicare tax.
Does FICA apply to self-employed people?
Yes, as self-employment tax of 15.3% on 92.35% of net earnings, covering both the employee and employer shares.
Do I pay FICA on tips?
Yes. Tips you report to your employer are wages for Social Security and Medicare, even though the new tip deduction lowers federal income tax.
Why does my pay stub show OASDI?
OASDI stands for Old-Age, Survivors and Disability Insurance, the official name of Social Security tax.
Will I get my FICA back if I never collect Social Security?
No. FICA is not refunded, although it funds disability and survivor benefits that may protect you and your family along the way.
What does FICA stand for?
Federal Insurance Contributions Act, the payroll tax law that funds Social Security and, since 1966, Medicare.
Is FICA the same as federal income tax?
No. FICA funds Social Security and Medicare at flat rates; federal income tax uses brackets, deductions and credits and is reconciled on your return.
Do retirees pay FICA?
Only on wages from work. Pensions, Social Security benefits and retirement account withdrawals are not subject to FICA.
This article is for general education only and is not tax, legal or investment advice. Figures and rules change; confirm details with the IRS or a qualified professional before making decisions.