What Is FICA? Social Security & Medicare Explained
Updated July 20, 2026 · Figures reflect 2026 IRS, SSA, and state tax data — see our methodology.
FICA stands for the Federal Insurance Contributions Act — the 1935 law (expanded in 1965) that funds Social Security and Medicare through a payroll tax. It is the line on your pay stub that surprises new workers most, because unlike income tax it has no standard deduction, no allowances, and no way to reduce it with a W-4: FICA comes out of the very first dollar you earn, at a flat rate, every single paycheck.
The 2026 FICA rates at a glance
| Tax | Employee rate | Employer rate | 2026 limit |
|---|---|---|---|
| Social Security (OASDI) | 6.2% | 6.2% | First $184,500 of wages |
| Medicare | 1.45% | 1.45% | No limit |
| Additional Medicare | 0.9% | — | Wages above $200k single / $250k married |
For most employees the total is 7.65%of gross pay. Your employer pays a matching 7.65% on top of your wages — money you never see on your stub but that effectively doubles the program's funding per worker.
Social Security: 6.2% up to the wage base
The Social Security portion (officially OASDI — Old-Age, Survivors, and Disability Insurance) applies to wages up to an annual cap called the wage base, which the Social Security Administration adjusts each year for wage growth. For 2026 it is $184,500, up from $176,100 in 2025.
The math: 6.2% × $184,500 = $11,439 — the maximum any employee pays into Social Security in 2026. Earn $300,000 and you still pay $11,439, which is why high earners see their take-home percentage tick up partway through the year: once year-to-date wages cross the base, Social Security withholding stops until January.
Medicare: 1.45% on everything, plus the 0.9% surtax
Medicare has no wage cap — 1.45% applies to every dollar. High earners pay an extra 0.9% Additional Medicare Tax on wages above $200,000 (single) or $250,000 (married filing jointly). Two quirks worth knowing:
- The thresholds are statutory — set in 2013 and never adjusted for inflation — so more workers drift into the surtax every year.
- Employers must start withholding the extra 0.9% once your wages at that job pass $200,000, regardless of filing status. If you are married and your household lands under $250,000, you get the difference back at tax time.
What FICA looks like on real salaries
| Salary | Social Security | Medicare | Total FICA | % of gross |
|---|---|---|---|---|
| $45,000 | $2,790 | $653 | $3,443 | 7.65% |
| $75,000 | $4,650 | $1,088 | $5,738 | 7.65% |
| $120,000 | $7,440 | $1,740 | $9,180 | 7.65% |
| $250,000 (single) | $11,439 | $4,075 | $15,514 | 6.21% |
Notice the regressive shape: FICA is a bigger relative burden at $45,000 than at $250,000, because Social Security stops at the wage base. For many middle-income households FICA actually exceeds their federal income tax bill.
Self-employed? You pay both halves
Freelancers and business owners pay both the employee and employer shares — 15.3% — as self-employment taxunder SECA (the Self-Employment Contributions Act). Two softeners: the tax applies to 92.35% of net self-employment earnings rather than the full amount, and you deduct the "employer half" when computing your income tax. Still, SE tax is the biggest tax shock for new freelancers, and it is the reason quarterly estimated payments exist.
What you actually get for it
FICA is not a black hole. Your Social Security payments earn credits — up to four per year — and you generally need 40 credits (about ten working years) to qualify for retirement benefits. Your benefit amount is computed from your 35 highest-earning years, which is also why the wage base caps both the tax and the benefit formula. Medicare taxes similarly earn premium-free Part A hospital coverage at 65 for most workers with a ten-year work history.
Can you reduce FICA?
Mostly no — and that catches people off guard. Traditional 401(k) contributions reduce your incometax but not FICA; you pay Social Security and Medicare on that money before it goes into the plan. The main legal exceptions are Section 125 "cafeteria plan" benefits: employer-sponsored health premiums, FSA contributions, and HSA contributions made through payroll, which escape both income tax and FICA. A handful of groups are exempt entirely — some state and local government employees with their own pension systems, certain students working for their university, and members of specific religious orders — but for ordinary W-2 workers, FICA is unavoidable.
Frequently asked questions
Why do Social Security and Medicare show as separate lines on my stub?
Payroll systems report the two components separately (sometimes labeled OASDI/EE and MED/EE, or FED OASDI and FED MED). Add them and you get the familiar 7.65%. "EE" means employee share; the employer share never appears on your stub.
Does FICA come out of bonuses and overtime?
Yes. All wage income — regular pay, overtime, bonuses, commissions — is FICA wages. The special withholding rules you may have heard about for bonuses only affect income tax withholding; see Why is my bonus taxed so much?
I had two jobs and overpaid Social Security. Now what?
Each employer withholds up to the full wage base without knowing about the other. If your combined Social Security withholding exceeds the annual maximum ($11,439 for 2026), you claim the excess as a credit on your federal tax return — it comes back automatically when you file.
Is FICA the same as federal income tax?
No — they are entirely separate systems. Federal income tax is progressive, adjusted by your W-4, and settled annually on your return. FICA is flat, unaffected by your W-4, and generally final. Our paycheck calculator shows both side by side so you can see which one takes more at your salary.
Want the full picture of what leaves your paycheck? Read How U.S. paycheck taxes work or estimate your own take-home with the paycheck calculator.