FICA — the Federal Insurance Contributions Act — is the tax that funds Social Security and Medicare. It's separate from federal income tax, calculated differently, and shows up as its own line on every paycheck.
The two components
| Component | Employee Rate | Employer Rate | Wage Base (2025) |
|---|---|---|---|
| Social Security | 6.2% | 6.2% | $176,100 |
| Medicare | 1.45% | 1.45% | No limit |
Both you and your employer contribute — your employer matches what's withheld from your paycheck, so the true cost of FICA is double the rate shown on your payslip.
Social Security has a wage base cap
Unlike income tax, Social Security tax stops being withheld once your wages hit the annual wage base ($176,100 for 2025). Earn more than that in a year, and the excess isn't subject to the 6.2% Social Security portion — though Medicare tax keeps applying with no cap.
Additional Medicare Tax
High earners pay an extra 0.9% Additional Medicare Tax on wages above $200,000 (single) or $250,000 (married filing jointly) — this portion isn't matched by the employer, and it's on top of the standard 1.45%.
If you're self-employed
Self-employed individuals pay both the employee and employer portions themselves — the 15.3% Self-Employment Tax mentioned in our W-2 vs 1099 comparison is exactly FICA's two components combined, just paid entirely by one person instead of split.
See exactly how much FICA comes out of your paycheck.
Use the FICA Tax Calculator →What FICA actually funds
Unlike general income tax revenue, FICA contributions are specifically earmarked — Social Security funds retirement, disability, and survivor benefits, while Medicare funds hospital insurance for those 65+ or with qualifying disabilities. Your contribution history directly affects your future benefit eligibility and amount.
Wage base limits and Additional Medicare Tax thresholds are set annually and subject to change. Verify current figures with the IRS or SSA before making financial decisions.