FICA tax: How it works and current rates
At a glance
- FICA tax is a federal payroll tax that funds Social Security and Medicare programs in the U.S.
- The current FICA tax rate is 6.2% for Social Security and 1.45% for Medicare, totaling 7.65% for employees, with employers matching these contributions.
- Self-employed individuals pay the full FICA tax rate of 15.3%, which includes both the employee and employer portions.
- High earners may pay an extra 0.9% in additional Medicare tax on wages exceeding $200,000, while the Medicare cap applies to all earnings.
Whether you work as a W-2 employee or are self-employed, you must pay a portion of your earnings to the government. In the U.S., employers take out a percentage of your paycheck for Social Security and Medicare. The contribution to these social programs is called FICA taxes.
The Social Security portion of FICA payments goes to the Social Security Administration and the Medicare portion goes to the Department of Health and Human Services. But, how much do you have to pay and withhold? We provide answers around FICA taxes below.
What is FICA tax?
First, we’ll dive into the FICA tax meaning, then we’ll cover the history of how it came to be.
“What is FICA tax on my paycheck?” is a common tax question. If you glance at your paycheck, you’ll see your earnings, deductions, and net pay. Two deductions you’ll encounter on your check are Social Security and Medicare, otherwise known as FICA.
FICA is short for Federal Insurance Contributions Act—and is also referred to as payroll tax. FICA supports:
- Social Security is also known as Old-Age, Survivors, and Disability Insurance (or OASDI tax). It offers financial assistance to individuals who can’t work because of disability or age, or survivors of U.S. citizens who have passed away. Your Social Security number tracks how much you’ve paid to the program.
- Medicare helps Americans 65+ cover medical costs, including hospital stays and doctor visits.
History of FICA taxes
President Franklin D. Roosevelt signed the collection for Social Security into law in 1937. Then, in 1965, President Lyndon B. Johnson added Medicare to the existing FICA taxes. Today, every American worker makes FICA tax contributions.
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FICA tax rate
If you’re wondering, “What is the FICA tax amount?”, FICA taxes are equal to 15.3% of your earnings.
How much is FICA tax this year? If you work as a W-2 employee, you’ll pay half of the 15.3%. and your employer pays the other half. That said, for employees, the FICA tax rate for 2024 and 2025 is 7.65%, which combines 6.2% for Social Security and 1.45% for Medicare.
Related: What are paycheck taxes?
How FICA tax works for the self-employed
If you’re self-employed, you’ll pay into Social Security and Medicare on your net earnings based on a different set of rules from the Self-Employed Contributions Act (SECA).
SECA taxes are similar to FICA taxes. But, as a self-employed person you must pay the employee and employer portions, which adds up to the 15.3% mentioned above. Don’t worry too much about having to pay both portions. Self-employed people can deduct a portion of self-employment taxes when they file their federal income taxes, lowering their tax liability.
You can make these payments using the Electronic Federal Tax Payment System (EFTPS) as you file your quarterly estimated taxes.
FICA tax limit for Social Security
Those with higher incomes won’t need to apply the FICA tax rate to all their income. The maximum amount of earnings subject to Social Security tax, referred to as the taxable wage base, can increase annually with inflation. The limit is adjusted based on the national average wage index. In 2025, the taxable wage base is $176,100, up from $168,600 in 2024. So, if you earn more than $176,100 in 2025, you don’t pay Social Security tax on the amount above this limit. Only the Social Security portion of FICA has a wage base limit.
Additional Medicare tax rules
On top of the standard 1.45% Medicare tax, there’s an extra 0.9% tax for high earners. This additional tax applies to:
- Single filers’ earnings exceeding $200,000
- Married Filing Jointly filers’ earnings exceeding $250,000
- Married Filing Separately filers’ earnings exceeding $125,000
2024–2025 Rates and limits
| Employee pays | Employer pays | |
| Social Security tax (OASDI) | 6.2% On the first $168,600 in 2024 & the first $176,100 in 2025 | 6.2% Only on the first $168,600 in 2024 & the first $176,100 in 2025 |
| Medicare tax | 1.45% | 1.45% |
| Total FICA taxation | 7.65% | 7.65% |
| Additional Medicare tax | 0.9% Only on earnings over $200,000 for single filers; $250,000 for joint filers; and $125,000 for those Married Filing Separately |
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FICA tax exemptions
While most people will pay FICA taxes, some are exempt. These exemptions help ensure certain individuals aren’t unfairly taxed. Exemption groups include:
- Members of certain religious sects: Members of religious sects, like the Amish and recognized religious group in existence since December 31, 1950
- Nonimmigrants and nonresident aliens: Nonimmigrants and nonresident aliens, including international students temporarily living in the U.S. under F-1, J-1, or M-1 visa status (for less than five years)
- Partners: Payments to limited or general partners in a legal partnership
- Statutory nonemployees: Examples include drivers, homeworkers, insurance agents, salespeople, real estate professionals, or direct sellers
- Students: Students enrolled and regularly attending classes and working for qualifying education institutions
- Tips: Tip income of less than $20 per month
How do FICA tax contributions impact your retirement?
The benefits, or Primary Insurance Amount (PIA), you get from FICA contributions is based on the Social Security Administration’s formula.
In simple terms, the Average Indexed Monthly Earnings (AIME) formula takes your highest 35 earning years, indexes them to current wages, averages them, and then applies different percentages to arrive at your monthly benefit (PIA).
The formula also takes these factors into account:
- When you start taking the benefits
- Your spouse’s lifetime earnings
- If your spouse passes away
- Your relationship status
Use the Social Security Administration’s calculator to estimate your benefits.
Differences between FICA and other tax withholdings
Understanding how FICA and your other tax withholdings work is important so you know where your money is going. Although the government determines your FICA contributions, you have some control over your W-4 withholdings. FICA taxes are made up of Social Security and Medicare, which are fixed percentages taken from every paycheck, and both you and your employer contribute equally. These taxes help fund federal programs that provide benefits for retirees, the disabled, and Medicare recipients.
In contrast, federal income tax withholdings are based on the information you provide on your W-4 form, including your filing status, number of dependents, and any additional amount you choose to withhold. This means you have more flexibility to adjust how much is taken out of your paycheck for federal taxes. State and local income tax withholdings may also apply, depending on where you live. For guidance on federal withholding, use our W-4 calculator.
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