FICA is a payroll tax that funds Social Security and Medicare

FICA stands for Federal Insurance Contributions Act. It is a payroll tax your employer withholds from your paycheck every pay period. The money goes to two programs: Social Security (which pays retirement, disability, and survivor benefits) and Medicare (which pays for health insurance for people 65 and older, and some younger people with disabilities).

You will see FICA listed on your pay stub in two separate line items: Social Security tax and Medicare tax. Both are withheld automatically if you are a W-2 employee. Self-employed people pay FICA too, though they handle it differently at tax time.

Key Takeaways

  • FICA withholds 6.2% of your gross pay for Social Security and 1.45% for Medicare, totaling 7.65% before any additional Medicare tax applies.
  • Your employer also pays an equal FICA amount on your behalf, but that money does not show on your paycheck.
  • FICA withholding is mandatory for almost all W-2 employees and self-employed workers, with very few exceptions.
  • The Social Security portion stops once you reach the annual wage cap, which changes each year, but Medicare tax continues on all earnings.

How much FICA comes out of your paycheck

The Social Security portion is 6.2% of your gross pay (your earnings before any deductions). The Medicare portion is 1.45% of your gross pay. Together, that is 7.65% of every paycheck.

There is a catch with Medicare: if you earn over a certain amount in a year, you pay an additional 0.9% Medicare tax on the excess. This extra tax applies to single filers earning over $200,000 and married couples filing jointly earning over $250,000. Your employer is responsible for withholding this extra amount once you cross the threshold.

The Social Security tax has a wage cap. Once you earn a certain amount in a calendar year, Social Security tax stops being withheld from the rest of your paychecks that year. The cap changes annually—it was $168,600 in 2024, for example. Medicare tax has no cap and continues on all your earnings no matter how much you make.

Your employer pays FICA too, but you do not see it

Your employer must pay an amount equal to what you pay in FICA taxes. So if you pay 7.65%, your employer pays another 7.65% on your behalf. This employer portion does not appear on your paycheck because the employer sends it directly to the government.

This is why the total FICA burden is actually 15.3% of your wages—half comes from your paycheck, half comes from your employer's pocket. Self-employed people have to pay both halves themselves, which is why they owe more at tax time than W-2 employees do.

Why FICA is withheld from your paycheck

FICA withholding is mandatory by federal law for nearly all workers. The money funds Social Security and Medicare, which are insurance programs. When you pay FICA taxes, you are building credits toward your own Social Security retirement benefit and Medicare coverage later.

You cannot opt out of FICA unless you are in a very specific situation—for example, certain religious groups that are exempt from Social Security, or nonresident aliens on certain visa types. Most people have no choice: FICA comes out of every paycheck.

The difference between FICA and income tax withholding

FICA and federal income tax withholding are two separate deductions on your pay stub. FICA is a fixed percentage (7.65% base rate) that goes to Social Security and Medicare. Federal income tax withholding is based on your W-4 form and varies depending on your filing status, dependents, and other income.

You might also see state income tax and local tax withheld, depending on where you live and work. These are separate from FICA. FICA is always federal and always goes to Social Security and Medicare, while income tax withholding goes to the general Treasury.

How FICA withholding affects your take-home pay

FICA reduces your take-home pay by 7.65% (or more if you owe the additional Medicare tax). This is money that comes out before you see it. If you earn $2,000 in a pay period, FICA will reduce that by about $153, leaving you with $1,847 before income tax and any other deductions.

The amount withheld depends on your gross pay, not your net pay. Bonuses, overtime, and commissions all count toward FICA withholding. If you get a large bonus one pay period, your FICA withholding that period will be higher.

What happens to the FICA money you pay

The Social Security portion of your FICA tax goes into the Social Security Trust Fund. When you turn 62 or older, become disabled, or pass away, you or your family may receive benefits from this fund. The amount of your benefit is based partly on how much you paid in FICA taxes over your working years.

The Medicare portion goes into the Medicare Trust Fund. Once you turn 65, you become may be able to access for Medicare Part A (hospital insurance) and Part B (medical insurance), which are funded by the Medicare taxes you and your employer paid. If you become disabled before 65, you may also may have access to for Medicare.

Frequently Asked Questions

Why does my pay stub show FICA twice?

You are likely seeing Social Security and Medicare listed as separate line items. Both are FICA taxes, but they fund different programs and are tracked separately on your pay stub. Some employers also show the employer portion of FICA on your stub for informational purposes, though that money does not come from your paycheck.

Can I get FICA taxes back at tax time?

No. FICA is not refundable like federal income tax withholding can be. The money you pay in FICA goes directly to Social Security and Medicare and is not part of your income tax return. However, if you overpaid due to working multiple jobs, you can claim a credit on your tax return.

What if I do not work long enough to get Social Security?

Social Security requires 40 credits to receive retirement benefits, which typically means working about 10 years. If you do not reach 40 credits, you will not receive a retirement benefit based on your own earnings. However, you may still be may have access to to a spousal or survivor benefit if you are married or have dependents.

Does FICA withholding count toward my income tax?

No. FICA and federal income tax are separate. FICA goes to Social Security and Medicare. Federal income tax withholding goes to the general Treasury. Both come out of your paycheck, but they fund different programs and are tracked separately on your tax return.

What if I am self-employed—do I still pay FICA?

Yes. Self-employed people pay FICA through self-employment tax, which is calculated on your tax return. You pay both the employee and employer portions, totaling 15.3% of your net self-employment income. You can deduct half of this amount on your tax return.