FICA
Federal Insurance Contributions Act taxes that fund Social Security (6.2%) and Medicare (1.45%). Both employees and employers pay FICA, totaling 15.3% on wages.
FICA stands for the Federal Insurance Contributions Act. It is the payroll tax that funds two federal programs: Social Security (officially Old-Age, Survivors, and Disability Insurance) and Medicare (Hospital Insurance). FICA is separate from federal income tax.
For employees, FICA is split between the worker and employer. Each side pays 6.2% for Social Security (on wages up to the wage base of $176,100 in 2025) and 1.45% for Medicare (on all wages, with no cap). The combined employee share is 7.65%.
Self-employed individuals pay both the employee and employer portions, totaling 15.3%, through self-employment tax. However, they can deduct the employer-equivalent half (7.65%) as an above-the-line deduction on their income tax return, partially offsetting the extra cost.
Related Terms
Social Security Tax
A 6.2% payroll tax on wages up to the annual wage base ($176,100 in 2025), matched by your employer. Funds Social Security retirement, disability, and survivor benefits.
Medicare Tax
A 1.45% payroll tax on all wages with no income cap, matched by employers. High earners pay an Additional Medicare Tax of 0.9% on wages over $200,000 (single).
Self-Employment Tax
The combined Social Security (12.4%) and Medicare (2.9%) tax paid by self-employed individuals — effectively both the employee and employer shares of FICA, totaling 15.3%.
Wage Base
The maximum amount of earnings subject to Social Security tax in a given year. For 2025, the wage base is $176,100. Earnings above this amount are exempt from Social Security tax.