What Is FICA Tax? 2025–2026 Rates, Limits & How to Calculate It

FICA tax is the U.S. federal payroll tax that funds Social Security and Medicare. It totals 15.3% of eligible wages, split evenly between employer and employee — 6.2% each for Social Security (up to a wage base limit) and 1.45% each for Medicare (with no cap). Employees earning over $200,000 also owe an extra 0.9% Medicare tax that employers withhold but don’t match.

If you’ve ever looked at a pay stub and asked “what is FICA on my paycheck,” or you run payroll and need to know exactly how much to withhold, this guide covers everything: what FICA stands for, current FICA tax rates for 2025 and 2026, the FICA wage base limit, how to calculate FICA tax step by step, who’s exempt, and how FICA differs from Social Security and federal income tax.

What Is FICA?

FICA stands for the Federal Insurance Contributions Act, the 1935 law that created the payroll tax funding Social Security and Medicare. FICA taxation isn’t optional — it’s a mandatory federal payroll tax that both employers and employees must pay on nearly all wages.

FICA is made up of two separate taxes:

• Social Security tax (OASDI) — Old-Age, Survivors, and Disability Insurance. This funds retirement benefits, disability benefits, and survivor benefits paid to a deceased worker’s family.
• Medicare tax (HI) — Hospital Insurance. This funds Medicare Part A coverage for people 65 and older, plus certain younger people with disabilities.

People often ask, “is FICA the same as Social Security tax?” The answer is no — Social Security is one half of FICA. FICA is the umbrella term for both the Social Security and Medicare withholding combined.

What Is the FICA Tax Rate in 2025 and 2026?

The FICA tax rate is a combined 15.3% of taxable wages: 7.65% paid by the employee and 7.65% matched by the employer. The rate itself hasn’t changed between 2025 and 2026 — what changes each year is the Social Security wage base limit.

So when someone asks “what’s FICA tax percentage,” the short answer is 7.65% of your gross pay comes out of your paycheck, and your employer pays a matching 7.65% on top — money you never see, but it’s still part of the true cost of employing you. These rates are confirmed directly by the IRS in Topic No. 751 — Social Security and Medicare Withholding Rates.

FICA Wage Base Limit: 2025 vs. 2026

Only the Social Security portion of FICA has an annual wage base limit (a maximum amount of earnings subject to the tax). Medicare tax has no cap — every dollar of wages is taxed at 1.45%.

So, what is the 2026 FICA limit? The Social Security wage base rose to $184,500 for 2026, up from $176,100 in 2025 — about a 4.8% increase tied to the Social Security Administration’s annual cost-of-living adjustment. Once an employee’s year-to-date wages cross that threshold, the 6.2% Social Security tax stops applying for the rest of the year, but the 1.45% Medicare tax continues on every additional dollar earned.

What Are FICA Wages?

FICA wages are the taxable compensation subject to FICA withholding. This is broader than most people expect. FICA wages typically include:

• Regular salary and hourly wages
• Overtime pay
• Bonuses and commissions
• Reported tips
• Certain taxable fringe benefits
• Employee salary deferrals into a 401(k) or similar retirement plan

That last point catches many people off guard: contributions you elect to defer into a 401(k) plan reduce your federal taxable income, but they’re still counted as FICA wages and remain subject to Social Security and Medicare tax.

How to Calculate FICA Tax (Step-by-Step)

Here’s exactly how to calculate FICA withholding for any employee:

Step 1: Identify total FICA-eligible wages for the pay period. Add up salary, wages, tips, bonuses, commissions, and taxable fringe benefits.

Step 2: Calculate the Social Security portion. Multiply eligible wages by 6.2%, but only up to the annual wage base ($184,500 in 2026). Once year-to-date wages exceed the cap, stop applying the 6.2% rate for the remainder of the year.

Step 3: Calculate the Medicare portion. Multiply all eligible wages by 1.45%. There’s no cap here, so this applies to 100% of wages.

Step 4: Check for Additional Medicare Tax. If an employee’s wages exceed $200,000 in the calendar year (regardless of filing status), withhold an extra 0.9% on everything above that threshold. This one is employee-only — employers do not match it. Full guidance on calculating and reporting this tax is in the IRS Instructions for Form 8959, Additional Medicare Tax.

Step 5: Match the employee’s Social Security and Medicare withholding. As the employer, add an equal 6.2% Social Security and 1.45% Medicare contribution on top of what you withheld from the employee.

FICA Tax Calculation Example

Say an employee earns $3,000 in a biweekly pay period and hasn’t hit the Social Security wage base yet:

That combined $459 is what gets deposited with the IRS for that one pay period — half withheld from the employee’s check, half paid directly by the employer.

What Is FICA on My Paycheck?

Most payroll systems break FICA into two separate line items rather than one combined charge, so it’s common to see labels like:

• FICA-SS, SS Tax, or OASDI — the 6.2% Social Security portion
• FICA-EE or Fed MED/EE — Medicare tax withheld from the employee (“EE” is payroll shorthand for “employee”)
• Medicare or FICA Med — the 1.45% Medicare portion

At year-end, your Form W-2 reports these separately: Box 4 shows total Social Security tax withheld, and Box 6 shows total Medicare tax withheld. If your paycheck shows both, that’s normal — it’s not a duplicate charge, it’s just FICA split into its two components.

FICA vs. Social Security Tax vs. Medicare Tax

These terms get used interchangeably, but they aren’t identical:

• FICA is the umbrella payroll tax law covering both programs.
• Social Security tax is the 6.2%/6.2% portion of FICA, capped at the annual wage base.
• Medicare tax is the 1.45%/1.45% portion of FICA, with no cap.

So “FICA vs. Medicare tax” isn’t really an either/or — Medicare tax is simply one of the two pieces that make up FICA.

Is FICA the Same as Federal Income Tax?

No. These are two entirely separate withholdings that show up on the same pay stub:

Who Pays FICA Taxes — and Who’s Exempt?

Nearly every W-2 employee and their employer pays FICA tax. However, the IRS recognizes several exemptions:

• Self-employed individuals (they pay SECA instead — see below)
• Certain nonresident aliens working under specific visa categories
• Family employees under age 18 working for a parent’s sole proprietorship
• Employees of certain religious organizations that have filed for exemption
• State and local government employees covered by an alternative retirement system
• Student employees working at the school they attend
• Employer contributions to qualified retirement plans

FICA for the Self-Employed: SECA

Self-employed workers don’t pay FICA directly. Instead, they pay Self-Employment Contributions Act (SECA) tax, which covers both the “employer” and “employee” halves themselves:

• 12.4% for Social Security (up to the same annual wage base)
• 2.9% for Medicare (uncapped)
• Total: 15.3% of net self-employment earnings

If you’re a freelancer, sole proprietor, or independent contractor trying to plan around this, KMK Ventures’ individual tax return and tax planning and advisory services can help you estimate and manage your SECA liability alongside income tax.

Recent Legislative Changes Affecting FICA

The One Big Beautiful Bill Act (OBBBA), signed into law in 2025, introduced new individual income tax deductions that are frequently confused with FICA relief. It’s worth being precise here:

• “No tax on tips” created a new income tax deduction for qualified tips, but it does not exempt tips from FICA. Employers must still withhold Social Security and Medicare tax on every reported tip dollar. See our breakdown of what “no tax on tips” actually changes.
• “No tax on overtime” works the same way — it’s an income tax deduction, not a payroll tax exemption. FICA still applies to overtime wages in full. Read more in our no tax on overtime guide.
• The new senior deduction created under OBBBA also doesn’t touch FICA withholding rules — it affects how much of a retiree’s income tax bill is reduced, not payroll tax. We cover the details in our guide to the Big Beautiful Bill Social Security senior deduction.

Employer Responsibilities for FICA Compliance

If you run payroll, FICA comes with ongoing reporting and deposit obligations, all outlined in the IRS’s Publication 15 (Circular E), Employer’s Tax Guide:

• Withhold correctly every pay period, tracking each employee’s year-to-date wages against the Social Security wage base.
• Deposit both halves (employee withholding + employer match) with the IRS on your assigned deposit schedule.
• File Form 941 quarterly (or Form 944 annually, if eligible) to report FICA liabilities.
• Report annually on Form W-2, showing Social Security wages/tax in Boxes 3–4 and Medicare wages/tax in Boxes 5–6.

Missing a FICA deposit deadline can trigger IRS penalties that scale with how late the payment is — our guide on what happens when you miss an IRS payroll tax deadline explains the penalty tiers. Many growing businesses avoid this risk entirely by working with an outsourced payroll provider that automates FICA calculations, deposits, and filings. KMK Ventures’ payroll management services handle exactly this — accurate FICA withholding, timely deposits, and clean quarterly and year-end filings — so nothing slips through the cracks.