The FICA rate is the percentage of your paycheck that goes to Social Security and Medicare
FICA stands for the Federal Insurance Contributions Act. The FICA rate is split into two parts: 6.2% for Social Security and 1.45% for Medicare. These percentages come out of your gross pay before taxes. If you are self-employed, you pay both the employee and employer portions, which doubles the rate to 12.4% for Social Security and 2.9% for Medicare.
Your employer withholds these amounts from each paycheck and sends them to the federal government. The money funds Social Security retirement benefits, disability benefits, survivor benefits, and Medicare hospital insurance. You do not choose whether to pay FICA — it is mandatory for nearly all workers in the United States.
The rates have been set by law since 1990 and do not change year to year. However, Social Security has a wage base limit, which means you only pay the 6.2% rate on income up to a certain amount. In 2024, that limit is $168,600. Medicare has no wage base limit, so you pay 1.45% on all your income, plus an additional 0.9% Medicare tax on wages above $200,000 (or $250,000 for married couples filing jointly).
Key Takeaways
- FICA taxes are 6.2% for Social Security and 1.45% for Medicare, withheld automatically from your paycheck.
- Self-employed workers pay both the employee and employer share, totaling 12.4% for Social Security and 2.9% for Medicare.
- Social Security tax only applies to income below the annual wage base limit, which changes each year.
- Medicare tax applies to all wages with no upper limit, plus an extra 0.9% on high earners.
- The money you pay in FICA taxes funds your future Social Security and Medicare benefits.
How the Social Security portion of FICA works
The 6.2% Social Security rate applies only to wages up to the annual wage base limit. This limit increases most years based on average wage growth. Once your income reaches that limit in a calendar year, your employer stops withholding the 6.2% for the rest of that year. If you work for multiple employers or change jobs, you may pay more than the annual maximum if your combined income exceeds the limit — but you can claim a credit for the overpayment when you file your tax return.
The Social Security tax you pay now builds your earnings record. When you reach retirement age, the Social Security Administration calculates your benefit based on your 35 highest-earning years. The more you earn and pay in, the higher your future benefit will be, up to a maximum. Disability and survivor benefits also draw from the same Social Security trust fund.
How the Medicare portion of FICA works
The 1.45% Medicare tax has no wage base limit, so you pay it on every dollar you earn. This portion funds Medicare Part A, which covers hospital stays, skilled nursing care, and hospice. Unlike Social Security, there is no maximum amount you can pay in Medicare tax during your working years.
If your income exceeds certain thresholds, you also pay an additional 0.9% Medicare tax. For 2024, this applies to wages over $200,000 for single filers, $250,000 for married couples filing jointly, and $125,000 for married couples filing separately. This extra tax was added in 2013 as part of the Affordable Care Act. Your employer withholds it automatically if your wages cross the threshold.
The difference between employee and employer FICA rates
When you work for an employer, you pay 6.2% for Social Security and 1.45% for Medicare — a total of 7.65%. Your employer also pays 7.65% on your behalf. These are separate amounts; your employer's contribution does not reduce your paycheck. Both amounts go to the federal government to fund the same Social Security and Medicare programs.
Self-employed workers must pay both shares themselves. If you are self-employed, you pay 12.4% for Social Security (up to the wage base limit) and 2.9% for Medicare on your net self-employment income. You can deduct half of your self-employment tax when you file your income tax return, which provides some offset to the higher rate.
FICA rates for different types of workers
Most workers in the United States pay FICA taxes. This includes W-2 employees, self-employed people, household workers, farm workers, and clergy. However, some groups are exempt. Railroad workers pay into the Railroad Retirement Tax Act instead of FICA. Federal employees hired before 1984 do not pay Social Security tax. Some state and local government employees do not pay FICA if they are covered by a government pension plan instead.
Nonresident aliens on certain visas, such as F-1 students or J-1 exchange visitors, may be exempt from FICA taxes on wages earned in the United States, depending on their visa type and the nature of their work. If you fall into any of these categories, check with your employer or the IRS to confirm your status.
Why FICA rates matter for your retirement and benefits
The FICA taxes you pay create a record of your earnings and fund your future benefits. Your Social Security retirement benefit is based on your 35 highest-earning years. The more you earn and pay in FICA tax, the higher your benefit will be when you reach full retirement age. If you become disabled or die, your family may receive benefits from the same Social Security trust fund.
Medicare may be able to access is tied to your FICA payment history as well. To receive Medicare at age 65, you generally need at least 40 quarters of coverage, which means you must have paid FICA taxes for at least 10 years. The 1.45% Medicare tax you pay now funds your hospital insurance when you turn 65, regardless of your income at that time.
How FICA rates changed over time
The Social Security tax rate was 1% when the program started in 1935. It has increased gradually over the decades as the program expanded to cover disability and survivor benefits. The current 6.2% rate has been in place since 1990. The Medicare tax rate of 1.45% was set when Medicare began in 1965 and remained unchanged until the additional 0.9% tax was added in 2013.
Congress sets FICA rates through legislation. The rates do not automatically adjust based on inflation or program costs. Any change to the rates would require a new law passed by Congress and signed by the President. This means the rates you see today are the same rates that have applied for many years and are expected to continue unless Congress acts.
Frequently Asked Questions
Why do I pay FICA tax if I am not sure I will receive Social Security benefits?
FICA taxes fund not only your own retirement benefit but also disability and survivor benefits for your family. If you become unable to work before retirement age, you may receive Social Security Disability Insurance. If you die, your spouse and children may receive survivor benefits. These protections are part of what your FICA taxes pay for, even if you never collect a retirement benefit yourself.
Can I opt out of paying FICA taxes?
No. FICA taxes are mandatory for nearly all workers. Some narrow groups, such as certain federal employees or members of religious communities that have received an exemption, do not pay. If you are unsure whether you are exempt, contact your employer or the IRS.
What happens to my FICA taxes if I move to another country?
Your FICA payment history stays with you. If you have paid into Social Security for at least 10 years, you can receive retirement benefits even if you live abroad. Some countries have agreements with the United States that allow workers to count time paid in both countries toward their benefits. Check with the Social Security Administration if you plan to move internationally.
Do I pay FICA taxes on all types of income?
FICA taxes explore to wages and self-employment income. They do not explore to investment income, interest, dividends, capital gains, or rental income. If you have a job and also earn money from investments, you only pay FICA on the wages from your job.
Is the FICA rate the same in every state?
Yes. FICA is a federal tax, so the rate is the same across all states. Some states also have their own income tax, but that is separate from FICA and varies by state.