FICA stands for the Federal Insurance Contributions Act, and it funds two critical programs: Social Security and Medicare. If you have ever looked at your pay stub and wondered where a significant chunk of your paycheck goes before you even see it, FICA is a big part of the answer.
The FICA Tax Rates
FICA tax has two components:
Social Security tax: 6.2% on wages up to the wage base limit of $176,100 in 2025. Your employer pays an additional 6.2%, bringing the total Social Security tax to 12.4%.
Medicare tax: 1.45% on all wages with no income cap. Your employer also pays 1.45%, for a combined 2.9%.
Together, employees pay 7.65% in FICA taxes, and the total combined employee-employer rate is 15.3%.
The Social Security Wage Base
One key feature of Social Security tax is the wage base limit. In 2025, you only pay Social Security tax on the first $176,100 of earnings. Any wages above that threshold are exempt from the 6.2% Social Security tax — though they are still subject to Medicare tax.
For example, if you earn $200,000, you pay Social Security tax on $176,100 and Medicare tax on the full $200,000.
Additional Medicare Tax for High Earners
Since 2013, an extra 0.9% Medicare surtax applies to wages exceeding certain thresholds:
| Filing Status | Threshold |
|---|---|
| Single | $200,000 |
| Married Filing Jointly | $250,000 |
| Married Filing Separately | $125,000 |
This additional tax is paid only by the employee — your employer does not match it. If you earn $300,000 as a single filer, you pay the standard 1.45% Medicare tax on all $300,000 plus the 0.9% surtax on $100,000 (the amount over $200,000).
Employee vs. Employer Responsibilities
As a W-2 employee, your employer withholds your share of FICA from each paycheck and sends it to the IRS along with the employer match. You will see separate line items for Social Security and Medicare on your pay stub.
Your employer pays exactly the same amount you do — so for every dollar of FICA you contribute, your employer contributes another dollar on your behalf.
Self-Employment and FICA
If you are self-employed, you pay both the employee and employer portions, known as self-employment tax — a total of 15.3%. However, you get two benefits to offset this:
- You only pay the 15.3% on 92.35% of your net self-employment earnings (rather than 100%).
- You can deduct the employer-equivalent portion (half of SE tax) as an above-the-line deduction on your income tax return.
Why It Matters
FICA taxes are often overlooked in financial planning because they are automatically withheld. But they represent a significant cost — especially for self-employed individuals paying the full 15.3%. Understanding these taxes helps you accurately forecast take-home pay and plan for your total tax burden.