What is FICA taxes?

FICA taxes fund Social Security and Medicare. They’re withheld from your paycheck; you and your employer each pay half. They are used to fund two major social insurance programs in the United States: Social Security (Old-Age, Survivors, and Disability Insurance) and Medicare (Hospital Insurance). FICA taxes are withheld automatically from employees' wages and matched equally by employers.

The FICA tax rate is composed of two parts: Social Security tax (6.2% for both employee and employer, totaling 12.4%) and Medicare tax (1.45% for both employee and employer, totaling 2.9%). The Social Security portion is subject to an annual taxable wage limit, which is $184,500 for the 2026 tax year ($176,100 in 2025). The Medicare portion is not subject to any wage limit.

High-income earners are also subject to the <a href="/articles/high-income-fica-additional-medicare-niit-math" class="text-emerald-600 dark:text-emerald-400 hover:text-emerald-700 dark:hover:text-emerald-300 hover:underline font-semibold transition-colors duration-200">Additional Medicare Tax</a> of 0.9% on wages exceeding $200,000 for single filers or $250,000 for married couples filing jointly. Employers must withhold this tax but do not match it. Self-employed individuals must pay the equivalent of both employee and employer shares (15.3% self-employment tax) under the Self-Employment Contributions Act (SECA).

FICA tax withholdings differ significantly from self-employment taxes (SECA). While W-2 workers split the 15.3% tax burden equally with their employers, self-employed individuals must pay the full 15.3% SECA tax themselves. To ease this burden, the IRS allows self-employed taxpayers to deduct 50% of their self-employment tax as an above-the-line deduction, offsetting their AGI. Additionally, the 0.9% Additional Medicare Tax is unique because its thresholds ($200,000 for single filers, $250,000 for married filing jointly, and $125,000 for married filing separately) are not indexed for inflation, causing more taxpayers to trigger the tax over time. It is also important to note that certain groups are exempt from FICA taxes; this includes students employed by the university they attend (the student FICA exception) and foreign students on temporary visas (such as F-1, J-1, or M-1) working within the terms of their visa.