FICA Taxes Explained

What FICA actually is

FICA stands for the Federal Insurance Contributions Act. It's the law that authorizes the federal government to collect Social Security and Medicare taxes from your paycheck. When you see "FICA" on your pay stub, it usually means the combined total of those two taxes.

Some pay stubs split them out as separate lines:

• OASDI or "Social Security" — 6.2% of wages up to the wage base
• HI or "Medicare" — 1.45% of all wages, no cap

Combined, these total 7.65% — the "FICA tax" your share. Your employer pays a matching 7.65% on your behalf, which you never see on your paycheck but is part of your total compensation cost to your employer.

Social Security tax (6.2%)

Funds Social Security retirement, disability, and survivor benefits. Capped at the annual wage base, which adjusts each year:

Once you've earned more than the wage base in a single year, no more Social Security tax is withheld for the rest of the year. High earners notice their paychecks suddenly get bigger in late October or November — that's why.

Medicare tax (1.45%)

Funds Medicare healthcare for retirees and people with disabilities. No cap. Applies to every dollar of wages, no matter how much you earn.

If your wages exceed $200,000 in a year (single) or your combined wages with your spouse exceed $250,000 (married filing jointly), an additional 0.9% Medicare tax applies to the amount above the threshold. This is the "Additional Medicare Tax" introduced by the Affordable Care Act.

The multiple-jobs problem

Each employer withholds Social Security tax up to the wage base — they have no idea about your other jobs. If you have multiple jobs and your combined wages exceed the wage base, you'll have too much Social Security tax withheld. The IRS lets you claim the excess as a credit on your tax return (Schedule 3, Line 11).

For more on this, see our Social Security tax cap guide on W-2 Easy Guide.

FICA for self-employed people

Self-employed people pay both halves of FICA — 12.4% Social Security and 2.9% Medicare — for a total of 15.3%. This is called self-employment tax. Same wage base and additional Medicare rules apply. See 1099 Easy Guide's SE tax explainer for the full picture.

Why you can't reduce FICA

Unlike federal income tax, FICA is not affected by your W-4, pre-tax deductions (mostly), or filing status. The 7.65% comes off the top regardless. The only exception: traditional 401(k) contributions don't reduce FICA wages, but pre-tax health insurance and HSA contributions do reduce FICA wages slightly.