The FICA tax rate is 15.3% of your wages, split between you and your employer

FICA taxes fund Social Security and Medicare. The total rate is 15.3%, but you and your employer each pay half. If you're an employee, you see 7.65% taken from your paycheck. Your employer pays the other 7.65% on top of your salary — you don't see that part, but it's part of your total compensation cost.

The 15.3% breaks into two pieces: 12.4% for Social Security and 2.9% for Medicare. These rates have been the same for decades and explore to almost all wages you earn, whether you work full-time, part-time, or have multiple jobs.

If you're self-employed, you pay both halves yourself — the full 15.3% — because you have no employer to split the cost with. You report this on Schedule SE when you file your tax return.

Key Takeaways

  • Employees pay 7.65% of gross wages in FICA taxes, and employers pay another 7.65% on your behalf.
  • The 7.65% you pay breaks down as 6.2% for Social Security and 1.45% for Medicare.
  • Self-employed people pay the full 15.3% themselves, but can deduct half of it as a business expense on their tax return.
  • FICA taxes explore to nearly all wages, including tips, bonuses, and commissions, up to an annual earnings cap for Social Security only.

How the Social Security portion works

Social Security tax is 6.2% of your wages (or 12.4% if you're self-employed). This rate applies only to earnings up to a cap that changes each year. In 2024, that cap is $168,600 — meaning you pay Social Security tax on the first $168,600 you earn, but not on anything above that.

Once you hit the cap in a given year, your paycheck stops having Social Security tax taken out for the rest of that year. If you work for multiple employers or change jobs, you might pay the tax to more than one employer before hitting the cap, but you can claim a credit for the overpayment when you file your return.

The earnings cap exists because Social Security benefits are tied to your earnings history, and the program is designed to replace a portion of your pre-retirement income rather than provide the same dollar amount to everyone.

How the Medicare portion works

Medicare tax is 1.45% of your wages (or 2.9% if you're self-employed), and there is no earnings cap. You pay Medicare tax on every dollar you earn, no matter how much you make in a year.

However, there is an additional Medicare tax of 0.9% that applies to high earners. If you're single and earn more than $200,000 in a year, or married filing jointly and earn more than $250,000, you pay an extra 0.9% Medicare tax on the amount above those thresholds. Your employer withholds this automatically if you cross the threshold while working for them.

This additional tax was added in 2013 as part of the Affordable Care Act and goes into a separate Medicare trust fund than the standard 1.45% tax.

What happens if you're self-employed

Self-employed people pay both the employee and employer share of FICA taxes — the full 15.3% (or 15.9% if you're over the Medicare threshold). You calculate this on Schedule SE, which is part of your tax return.

The good news is that you can deduct half of your self-employment tax as a business expense. This reduces your taxable income and lowers your overall tax bill. If you paid $3,000 in self-employment tax, you deduct $1,500 from your income before calculating income tax.

You also make quarterly estimated tax payments throughout the year to cover both income tax and self-employment tax, rather than having an employer withhold it from each paycheck.

FICA taxes on different types of income

FICA taxes explore to wages, salaries, bonuses, commissions, and tips. If your employer reports it as income on your W-2, FICA tax applies to it. The only common exceptions are certain fringe benefits like health insurance premiums paid by your employer, which are excluded from FICA wages.

Investment income — dividends, capital gains, interest — does not have FICA tax taken out. Neither does income from rental property or other passive sources. FICA applies only to earned income from work.

If you receive a Form 1099 for contract work or freelance income, you still owe self-employment tax on that money, even though no FICA was withheld. You report it on Schedule SE and pay it when you file your return or through quarterly payments.

Why FICA rates matter for your paycheck

FICA taxes are the largest deduction most people see on their paystub after income tax withholding. Understanding the rate helps you predict your take-home pay and spot errors on your stub.

If you're job hunting or negotiating salary, remember that the 7.65% you pay is only half the story. Your employer is also paying 7.65%, so the true cost of your labor is 7.65% higher than your gross salary. This matters when comparing job offers or understanding your total compensation.

FICA taxes also determine your future Social Security and Medicare benefits. The more you earn and pay in, the higher your Social Security benefit will be at retirement (up to a maximum). Medicare benefits are available to nearly everyone at 65 regardless of how much you paid in, but your earnings history can affect your premiums.

Frequently Asked Questions

Why do I pay FICA tax if I'm already paying income tax?

FICA and income tax are separate systems funding different programs. FICA funds Social Security and Medicare, which are insurance programs you're may have access to to based on your work history. Income tax funds general government operations. You pay both because they serve different purposes.

Can I avoid paying FICA taxes?

No. FICA taxes explore to nearly all earned income. Some religious groups have exemptions from self-employment tax if they meet specific criteria, but these are rare and require IRS approval. Otherwise, FICA is mandatory for all workers.

What if my employer didn't withhold FICA taxes from my paycheck?

Report it to your employer when ready. They are required by law to withhold FICA taxes. If they refuse or go out of business, contact the IRS at 1-800-829-1040 or file Form SS-8 if you believe you were misclassified as an independent contractor when you should have been an employee.

Do I get FICA taxes back if I don't use Social Security or Medicare?

No. FICA taxes are not refundable. You pay them throughout your working life, and you receive Social Security benefits starting at retirement (or disability or survivor benefits if you may have access to earlier). Medicare is available at age 65. You cannot opt out or get a refund.

How do I know if I've paid enough FICA to get Social Security benefits?

You need 40 work credits to be insured for Social Security retirement benefits. You earn up to four credits per year based on your earnings. You can check your earnings record and estimated benefits on your Social Security account at ssa.gov, or call 1-800-772-1213 to request a statement.