The federal payroll tax rate is not a single number — it splits into Social Security and Medicare, each with its own rate

Your employer withholds 6.2 percent for Social Security and 1.45 percent for Medicare from each paycheck. You pay the same amounts, and your employer matches both. These two taxes together make up what most people call "FICA" (Federal Insurance Contributions Act). The Social Security portion only applies to income up to a yearly cap — in 2024, that cap is $168,600 — but Medicare has no cap and applies to all wages.

These are not income tax withholdings. They fund specific programs: Social Security goes to retirement, disability, and survivor benefits; Medicare goes to hospital insurance. Your income tax withholding is separate and varies based on your W-4 form, your filing status, and your total income.

Self-employed people pay both the employee and employer share of these taxes, which means 12.4 percent for Social Security (up to the cap) and 2.9 percent for Medicare. They report this as self-employment tax on Schedule SE.

Key Takeaways

  • Social Security withholding is 6.2 percent of wages up to $168,600 per year in 2024; Medicare is 1.45 percent with no wage cap.
  • Your employer withholds the same amount you do, and both contributions are matched — you do not pay the full tax yourself.
  • These payroll taxes are separate from federal income tax withholding, which is based on your W-4 and changes year to year.
  • Self-employed workers pay both the employee and employer share of payroll taxes, totaling 15.3 percent (12.4 percent Social Security plus 2.9 percent Medicare).
  • The Social Security wage cap changes each year based on inflation; Medicare has no limit on how much income is taxed.

Why the Social Security cap matters if you earn above it

Once your wages hit the yearly cap, your employer stops withholding Social Security tax for the rest of that year. In 2024, that cap is $168,600. If you earn $200,000, you pay Social Security tax only on the first $168,600 — the remaining $31,400 is not subject to the 6.2 percent withholding.

Medicare withholding continues on all income with no limit. Additionally, if your income exceeds certain thresholds ($200,000 for single filers, $250,000 for married filing jointly), you owe an extra 0.9 percent Medicare tax on the amount above that threshold. This is called the Additional Medicare Tax, and it appears as a separate line item on your pay stub once you cross the threshold.

The Social Security cap adjusts each year. The Social Security Administration announces the new cap in October for the following year, based on average wage growth. This means the cap was different in 2023 than in 2024, and will be different again in 2025.

How to read these amounts on your pay stub

Your pay stub shows withholdings in separate lines. Look for "Social Security Tax" or "OASDI" (Old-Age, Survivors, and Disability Insurance — the formal name for Social Security), and "Medicare Tax" or "HI" (Hospital Insurance). Each line shows the amount withheld from that paycheck.

Below those, you may see "Social Security Wages" and "Medicare Wages" — these show how much of your gross pay was subject to each tax. If you are near the yearly cap, your Social Security Wages line may be lower than your gross pay, while Medicare Wages stays equal to gross pay.

If you earn over the Additional Medicare Tax threshold, you will see a separate line for that 0.9 percent withholding. Your employer's matching contributions do not appear on your pay stub — they are a cost to the employer, not deducted from your pay.

What happens if you work for multiple employers in the same year

If you work two jobs or change employers during the year, you could pay more Social Security tax than required. Each employer withholds 6.2 percent up to the $168,600 cap independently — they do not coordinate with each other. If you earn $100,000 at Job A and $100,000 at Job B, you will pay Social Security tax on both full amounts, even though your combined income is $200,000.

You can recover the overpayment when you file your tax return. The IRS will refund the excess Social Security tax you paid above the yearly limit. You claim this on Form 1040 or Form 1040-SR. You do not need to do anything special — the IRS calculates it automatically when processing your return.

How these rates compare to state and local payroll taxes

Federal payroll taxes are separate from state income tax withholding and local taxes. Some states have their own payroll taxes; others do not. Nine states have no state income tax at all. If you live in a state with income tax, your employer withholds that separately from federal withholding, and the rates vary by state.

Some cities also impose local income tax or payroll tax. New York City, for example, has a local income tax that appears as a separate withholding. These local and state withholdings do not affect your federal Social Security or Medicare contributions — they are entirely separate systems.

Why self-employed people pay double

When you work for an employer, the company pays half of your payroll taxes. You see 6.2 percent Social Security and 1.45 percent Medicare withheld from your paycheck, and your employer pays the matching 6.2 percent and 1.45 percent on your behalf. If you are self-employed, you are both the employee and the employer, so you owe both halves.

Self-employed workers pay 12.4 percent for Social Security (up to the yearly cap) and 2.9 percent for Medicare on their net self-employment income. They report this on Schedule SE and pay it with their tax return or through quarterly estimated tax payments. However, you can deduct half of your self-employment tax when calculating your adjusted gross income, which reduces your taxable income slightly.

Frequently Asked Questions

Does federal income tax withholding use the same rate as Social Security and Medicare?

No. Federal income tax withholding is separate and varies based on your W-4 form, filing status, and total income. Social Security and Medicare are fixed rates: 6.2 percent and 1.45 percent. Income tax withholding can range from zero to 37 percent depending on your situation.

What if I did not have enough withheld and owe money at tax time?

You can adjust your W-4 with your employer to increase withholding for the rest of the year. If you owe a large amount, you may also need to make quarterly estimated tax payments if you have other income (like self-employment or investment income) that is not subject to withholding.

Can I opt out of Social Security or Medicare withholding?

No. These withholdings are mandatory for all employees and self-employed people. The only exception is certain religious groups that have received an exemption from the IRS, which is rare and requires specific approval.

Does the Social Security wage cap reset each year?

Yes. The cap resets on January 1 each year. In 2024 it is $168,600; in 2025 it will be different. The Social Security Administration announces the new cap each October based on average wage growth in the economy.