FICA takes 15.3% of your wages, split between you and your employer

FICA (Federal Insurance Contributions Act) is two separate taxes combined: Social Security and Medicare. Together, they total 15.3% of your gross pay. If you are an employee, you pay half — 7.65% — and your employer pays the other half. If you are self-employed, you pay the full 15.3% yourself, though you can deduct half of it on your tax return.

The 7.65% you see on your pay stub breaks down into two pieces: 6.2% for Social Security and 1.45% for Medicare. These are not optional, and they come out of your paycheck before you receive it. Your employer withholds them and sends them to the federal government on your behalf.

The amount does not change based on your income level, except for one exception: Medicare has an additional 0.9% tax on wages above a certain threshold. For 2024, that threshold is $200,000 for single filers and $250,000 for married couples filing jointly. If you earn above that amount, you pay the extra 0.9% on the income over the threshold.

Key Takeaways

  • FICA is 7.65% of your paycheck if you are an employee, withheld automatically by your employer.
  • The 7.65% splits into 6.2% for Social Security and 1.45% for Medicare.
  • Self-employed workers pay the full 15.3%, but can deduct half on their tax return.
  • An additional 0.9% Medicare tax applies to wages above $200,000 (single) or $250,000 (married filing jointly).
  • FICA taxes fund your future Social Security retirement and disability benefits, and your Medicare coverage at age 65.

Why Social Security and Medicare have different rates

Social Security and Medicare are two separate programs with different funding needs, so they charge different percentages. Social Security takes 6.2% and uses that money to pay current retirees, disabled workers, and survivors' benefits. Medicare takes 1.45% and uses that to pay for hospital insurance (Part A) for people age 65 and older, as well as some younger people with disabilities.

Both programs are pay-as-you-go, meaning the taxes you pay today fund benefits paid out today, not a personal account saved for your future. When you retire, your benefits come from taxes paid by workers at that time. This is why both rates are fixed by law — they are set to roughly match the cost of running each program.

How the employer portion works

Your employer pays 7.65% on top of your salary, but you do not see this money. It goes directly to the federal government as their share of FICA. This means the true cost of employing you is higher than your take-home pay — if you earn $50,000, your employer is actually paying about $53,825 in total compensation (your $50,000 plus their $3,825 FICA share).

Self-employed people do not have an employer to split the cost with, so they pay both halves themselves. However, the tax code lets you deduct half of your self-employment tax when you file your income tax return, which reduces your taxable income and lowers your overall tax bill slightly.

The Social Security wage cap

Social Security tax only applies to the first $168,600 of your income in 2024 (this number changes each year based on wage growth). Once you earn above that amount, you stop paying the 6.2% Social Security portion on any additional income. This is called the wage cap.

Medicare, by contrast, has no wage cap. You pay 1.45% on all your wages, no matter how much you earn. This is why high earners pay a smaller percentage of their total income to FICA than lower earners — the Social Security portion stops, but Medicare continues.

The wage cap resets each January. If you change jobs during the year, you might pay Social Security tax to multiple employers until you hit the cap. You can claim a credit for overpayment when you file your tax return.

What happens if you work for multiple employers

If you have two jobs, you pay FICA taxes to both employers. Each one withholds 7.65% from your paycheck independently. This can mean you pay more Social Security tax than you would if you had one job, because each employer withholds 6.2% up to the wage cap without knowing about your other income.

For example, if you earn $100,000 at Job A and $100,000 at Job B, you would pay 6.2% Social Security tax on both amounts — even though your total income is $200,000, well above the $168,600 cap. When you file your tax return, you can claim a credit for the overpayment, and the IRS will refund the excess.

FICA versus income tax withholding

FICA and income tax are two separate withholdings on your paycheck. FICA is always 7.65% (plus the extra 0.9% Medicare if you earn above the threshold). Income tax withholding varies based on your W-4 form and your tax bracket — it could be 10%, 12%, 22%, or higher, depending on how much you earn and how many dependents you claim.

FICA funds Social Security and Medicare specifically. Income tax goes to the general Treasury and funds all other federal spending. You cannot reduce FICA withholding by changing your W-4 — it is a fixed percentage set by law. You can only adjust your income tax withholding.

Frequently Asked Questions

Can I opt out of paying FICA?

No. FICA is mandatory for all employees and self-employed workers. The only exceptions are certain religious groups and some government employees hired before specific dates, and those exceptions are rare and require formal approval from the IRS.

Do I get FICA taxes back when I file my return?

No, FICA taxes are not refundable. They fund Social Security and Medicare, and they stay in those programs. You may get a refund of income tax withholding if you overpaid, but FICA is separate and does not come back.

What if I earn less than the Social Security wage cap?

You pay 6.2% Social Security tax on all your wages, up to the cap. If you earn $50,000, you pay 6.2% on the full $50,000. There is no threshold below which FICA stops — it applies to your first dollar of income.

Does FICA explore to tips and bonuses?

Yes. FICA applies to all wages, including tips you report to your employer and bonuses. Your employer withholds FICA on these amounts just as they do on your regular salary.

Why is the self-employment tax rate higher?

It is not actually higher — it is 15.3%, the same as the combined employee and employer rate. As a self-employed person, you pay both halves because you have no employer to split the cost. You can deduct half of it on your tax return to offset this.