FICA Taxes Explained
“FICA” on your pay stub covers two federal payroll taxes — Social Security and Medicare — that fund the two largest US social-insurance programs. They are completely separate from federal income tax: your W-4 does not affect them, your deductions barely touch them, and everyone with wage income pays them from the first dollar.
Social Security (OASDI)
- Employee rate: 6.2% of wages, withheld from your paycheck.
- Employer match: your employer pays another 6.2%, so 12.4% total goes in on your behalf.
- Wage base cap: Social Security tax applies only up to an annual wage limit
— $184,500 in 2026 (up from $176,100 in 2025), adjusted for wage growth
each year. Once your year-to-date wages reach that cap, Social Security
withholding stops for the rest of the calendar year and restarts in January.
High earners see take-home rise noticeably the month they cross it. The
maximum employee Social Security tax in 2026 is
6.2% × $184,500 = $11,439.
Because the tax is capped, so is the benefit: your eventual Social Security retirement benefit is based on your highest 35 years of earnings, each counted only up to that year’s wage base.
Medicare
- Employee rate: 1.45% of all wages — no cap.
- Employer match: another 1.45%.
- Additional Medicare Tax: an extra 0.9% on wages above a threshold — $200,000 single, $250,000 married filing jointly, $125,000 married filing separately. Your employer starts withholding the extra 0.9% once your pay with that employer passes $200,000, regardless of filing status; your tax return reconciles the difference if your real threshold is higher (a two-earner couple) or you owe more (two jobs each under $200k but over $250k combined).
Worked example
A single employee earning $90,000 in salary, paid across the year:
| Tax | Calculation | Annual amount |
|---|---|---|
| Social Security | 6.2% × $90,000 (below the cap) | $5,580 |
| Medicare | 1.45% × $90,000 | $1,305 |
| Additional Medicare | income below $200,000 | $0 |
| Total FICA (employee) | $6,885 |
The employer pays another $6,885. A traditional 401(k) contribution would not change any of these numbers, because FICA is calculated on gross wages before 401(k) deferrals — see pre-tax vs post-tax deductions.
At $250,000 salary, the numbers change: Social Security caps at $11,439,
Medicare is 1.45% × $250,000 = $3,625, plus the 0.9% surtax on the $50,000
over $200,000 = $450, for $15,514 in employee FICA.
Self-employed? You pay both halves
With no employer to split the cost, a self-employed person owes self-employment tax: the full 12.4% for Social Security (up to the wage base) plus the full 2.9% for Medicare (no cap) — 15.3% on net self-employment earnings up to the cap and 2.9% above, plus the 0.9% additional Medicare tax over the threshold. Two partial offsets: net earnings are figured on about 92.35% of profit, and you deduct half of the self-employment tax as an adjustment to income. The self-employment tax calculator runs these numbers for a given profit.
Why pre-tax 401(k) does not reduce FICA
Traditional 401(k), 403(b), and 457 contributions reduce your income tax because they come out before income tax is figured — but Social Security and Medicare are calculated on gross wages before those deferrals. The common exceptions: an HSA contribution through payroll avoids FICA as well as income tax, and health/dental/vision premiums under a cafeteria plan skip FICA too.
What you get for it
- Social Security tax funds retirement, disability, and survivor benefits. Your benefit is your lifetime earnings (indexed, averaged over 35 years, up to each year’s wage base) run through a progressive formula that replaces a higher share of income for lower earners.
- Medicare tax funds Hospital Insurance (Medicare Part A), covering inpatient care for people 65+ and certain younger people with disabilities. Parts B and D are funded separately from premiums and general revenue.
Two jobs, or a job change mid-year
Each employer withholds Social Security independently, up to the wage base, from its payments to you. If you work two jobs and your combined wages exceed the wage base, you will have over-withheld Social Security across the two — the excess is credited back to you on your federal tax return (line for “excess Social Security tax withheld”), so you do not lose it. Medicare has no such cap, so it is never over-withheld, but the 0.9% surtax can be under-withheld if neither job alone crosses $200,000 while the two together cross your filing threshold; you settle that on the return.
Changing jobs mid-year resets the Social Security wage-base clock at the new employer — the new employer does not know what the old one already withheld, so it starts counting from zero. Again, any resulting over-withholding comes back on your return.
Where the money goes
The two taxes fund separate federal trust funds. Social Security’s are the OASI (retirement and survivors) and DI (disability) trust funds; Medicare’s is the Hospital Insurance trust fund. Current workers’ FICA largely pays current beneficiaries, with the trust funds absorbing timing differences. Projections about trust-fund depletion dates are a recurring policy topic; the relevant point for a paycheck is that the rates and the wage base are set by law and change only when Congress changes them (the wage base is indexed to wage growth automatically; the 6.2% / 1.45% rates are not indexed and have been stable for decades).
Common misconceptions
- “FICA is income tax.” It is a separate payroll tax with its own rules and its own trust funds.
- “My 401(k) lowers my FICA.” It lowers income tax only.
- “I’ll get Social Security tax back like a refund.” No — it buys future benefits, it is not withheld against a tax return.
- “The wage base cap means high earners pay less tax overall.” They pay a lower Social Security rate on their top dollars, but Medicare (and its surtax) has no cap.
The bottom line
FICA is 6.2% (Social Security, up to $184,500 in 2026) plus 1.45% (Medicare, uncapped), matched dollar-for-dollar by your employer, with an extra 0.9% Medicare surtax on high wages. Pre-tax retirement contributions do not reduce it; payroll HSA contributions and cafeteria-plan premiums do. The paycheck calculator shows Social Security and Medicare as separate lines, applies the wage-base cap, and adds the 0.9% surtax above the threshold.