What FICA and Social Security tax rates are

FICA tax is split into two parts: Social Security tax at 6.2% and Medicare tax at 1.45%. Your employer pays a matching 6.2% for Social Security and 1.45% for Medicare. Social Security tax only applies to the first $168,600 of your wages in 2024 — after that, no more is withheld from your paycheck for that year, though your employer's match continues. Medicare tax has no wage cap and continues on all earnings.

The 6.2% Social Security rate and 1.45% Medicare rate are the same for all employees and have not changed since 1990 for Social Security and 1993 for Medicare. If you are self-employed, you pay both the employee and employer portions — 12.4% for Social Security (up to the wage cap) and 2.9% for Medicare — though you can deduct half of what you pay as a business expense on your tax return.

These percentages come out of your gross pay before federal income tax is calculated. On a $50,000 annual salary, you would see $3,100 withheld for Social Security and $725 for Medicare each year, assuming you stay under the wage cap.

Key Takeaways

  • Social Security tax is 6.2% of your wages up to $168,600 per year in 2024, and Medicare tax is 1.45% with no wage limit.
  • Your employer matches both percentages, so the total FICA cost to employ you is 15.3% (7.65% from you, 7.65% from them).
  • Once you earn $168,600 in a calendar year, Social Security tax stops being withheld from your remaining paychecks, but Medicare continues.
  • Self-employed people pay both the employee and employer share — 12.4% for Social Security and 2.9% for Medicare — but can deduct half on their taxes.
  • The wage cap ($168,600 in 2024) increases each year based on average wage growth, so the threshold changes annually.

How the Social Security wage cap works

The wage cap is the maximum amount of your annual earnings subject to Social Security tax. In 2024, that cap is $168,600. If you earn $200,000 in a year, Social Security tax is only withheld on the first $168,600 — the remaining $31,400 is not subject to Social Security tax.

The cap increases each year. In 2023 it was $160,200, and in 2022 it was $147,000. The Social Security Administration adjusts it annually based on the national average wage index from two years prior. This means the 2025 cap will not be announced until October 2024. You can find the current and historical caps on the Social Security Administration website.

Medicare tax has no wage cap at all. Once you hit the Social Security cap, Medicare tax continues to be withheld on every dollar you earn for the rest of the year. Additionally, if your income exceeds $200,000 (single filers) or $250,000 (married filing jointly), an extra 0.9% Medicare tax is withheld on the excess — this is separate from the standard 1.45% Medicare tax.

Why these taxes are withheld

Social Security tax funds the Social Security program, which pays retirement benefits, survivor benefits, and disability benefits. Medicare tax funds the Medicare program, which covers hospital insurance (Part A) and medical insurance (Part B) for people 65 and older and some younger people with disabilities.

Both are mandatory federal programs. The money withheld from your paycheck is not held in an account with your name on it — it goes into a general trust fund that pays current beneficiaries. When you reach retirement age (between 62 and 70, depending on your birth year), you become may be able to access to draw from these programs based on your earnings history and age.

Your employer is required by law to withhold these amounts and send them to the IRS and Social Security Administration. If an employer fails to withhold or remit FICA taxes, they face penalties and the employee may still owe the taxes.

How to read FICA taxes on your pay stub

Your pay stub shows FICA withholding in separate line items. You will typically see "Social Security" or "OASDI" (Old-Age, Survivors, and Disability Insurance — the official name for Social Security) listed with the 6.2% amount, and "Medicare" listed with the 1.45% amount. Some pay stubs also show "Medicare Additional Tax" if you have crossed the $200,000/$250,000 income threshold.

The amount withheld should match your gross pay multiplied by the rate, minus any amounts already withheld earlier in the year if you have hit the Social Security wage cap. If you have earned $168,600 by November and your employer withholds $0 for Social Security in December, that is correct — you have reached the cap for that year.

If you notice FICA taxes are not being withheld, or the amounts seem wrong, contact your payroll department or HR. Errors in FICA withholding can affect your Social Security record and your tax return when you file.

What happens if you work multiple jobs

If you work two or more jobs in the same year, each employer withholds Social Security tax independently. This can cause you to overpay Social Security tax if your combined earnings exceed the wage cap. For example, if you earn $100,000 at Job A and $80,000 at Job B, both employers will withhold the full 6.2% on their portion, even though your total earnings are $180,000 — above the $168,600 cap.

When you file your tax return, you can claim a credit for the excess Social Security tax withheld. The IRS will refund the overpayment when you file, or you can explore it to taxes owed. You cannot claim this credit on your return until you have filed — there is no way to adjust it mid-year across employers.

Medicare tax does not have this problem because there is no wage cap. You will owe 1.45% on all earnings from all jobs, and that is what will be withheld.

Self-employed FICA taxes

If you are self-employed, you pay self-employment tax, which is the self-employed version of FICA. You pay 12.4% for Social Security (on net earnings up to $168,600) and 2.9% for Medicare (on all net earnings), for a total of 15.3%. This is double what an employee pays because you are covering both the employee and employer portions.

Self-employment tax is calculated on your net profit from self-employment — your business income minus business expenses — not your gross revenue. You report this on Schedule SE (Form 1040) when you file your tax return. The tax is due when you file your return, though you may need to make quarterly estimated tax payments if you expect to owe $1,000 or more.

The advantage is that you can deduct half of your self-employment tax as a business expense on your tax return, which reduces your taxable income. This deduction is taken on Form 1040 itself, not on Schedule C, and it applies to both the Social Security and Medicare portions.

How FICA taxes affect your Social Security benefit

The amount of Social Security tax you pay does not directly determine your benefit amount. Instead, your benefit is based on your 35 highest-earning years. The Social Security Administration tracks your earnings history and calculates your Primary Insurance Amount (PIA) — the benefit you are may have access to to at your full retirement age — using a formula that accounts for inflation and average wages.

Paying more in Social Security tax generally means you earned more, which typically results in a higher benefit. However, there is a maximum benefit amount, and the formula is weighted to replace a higher percentage of lower earners' income. Someone earning $50,000 per year will see a larger percentage of their earnings replaced by Social Security than someone earning $200,000.

To see your estimated benefit, you can create an account on ssa.gov and view your Social Security Statement, which shows your earnings history and projected benefits at different ages. This statement is free and updated annually.

Frequently Asked Questions

Why do I still pay Social Security tax if I am already retired?

If you continue to work after claiming Social Security, you still pay Social Security tax on your wages. However, if you claim benefits before your full retirement age and earn above a certain amount, your benefits are temporarily reduced. In 2024, benefits are reduced by $1 for every $2 earned above $23,400 if you have not yet reached full retirement age. Once you reach full retirement age, there is no earnings limit and no reduction.

Can I opt out of paying FICA taxes?

No. FICA taxes are mandatory for all employees and self-employed people with net earnings of $400 or more per year. There are very limited exceptions for certain religious groups and some government employees, but these require specific certification and approval from the IRS. For most workers, there is no legal way to avoid FICA withholding.

What if my employer did not withhold FICA taxes?

You are still responsible for paying the taxes owed, even if your employer failed to withhold them. Contact your employer's payroll department when ready to correct the error. If the employer refuses or goes out of business, you may owe the taxes when you file your return. You can also file a complaint with the Department of Labor or the IRS if you believe your employer is deliberately not withholding required taxes.

Does FICA tax explore to tips and bonuses?

Yes. Social Security and Medicare taxes explore to all wages, including tips, bonuses, commissions, and other compensation. Tips must be reported to your employer, and FICA taxes are withheld on the reported amount. Bonuses and commissions are treated as regular wages for FICA purposes.

What is the difference between FICA and federal income tax?

FICA funds Social Security and Medicare and is a fixed percentage (7.65% total). Federal income tax is separate, varies by income level and filing status, and funds general government operations. Both are withheld from your paycheck, but they go to different programs and are calculated differently.