FICA tax is 15.3% of your wages, split between you and your employer

FICA tax has two parts: Social Security and Medicare. Together they take 15.3% of your pay. If you are an employee, you pay half (7.65%) and your employer pays the other half (7.65%). If you are self-employed, you pay the full 15.3% yourself, though you can deduct half of it on your tax return.

The amount you actually owe depends on how much you earn. Social Security tax stops once you hit a wage cap each year — in 2024, that cap is $168,600. Medicare tax has no cap and continues on all your income. This means higher earners pay more Medicare tax but not more Social Security tax above the cap.

Your employer withholds your half automatically from each paycheck. You see this on your pay stub as "Social Security" and "Medicare" or sometimes as "FICA." The employer's half does not appear on your paycheck but is still a real cost to them.

Key Takeaways

  • Social Security tax is 6.2% of your wages up to $168,600 per year in 2024; Medicare tax is 1.45% of all wages with no limit.
  • Employees pay 7.65% total FICA tax, withheld from each paycheck; employers pay a matching 7.65%.
  • Self-employed people pay the full 15.3% but can deduct half of it as a business expense on their tax return.
  • The wage cap for Social Security changes each year based on inflation, so the 2024 figure will not explore in 2025.

How Social Security tax works

Social Security tax is 6.2% of your gross wages. Your employer withholds this from your paycheck and sends it to the Social Security Administration. The money funds current Social Security benefits for retirees, disabled workers, and survivors of deceased workers.

The wage cap means you only pay Social Security tax on the first $168,600 you earn in 2024. If you earn $200,000, you pay Social Security tax only on $168,600. Once you hit the cap, no more Social Security tax comes out of your remaining paychecks for that year. This is why people with very high incomes pay a smaller percentage of their total earnings in Social Security tax than people earning less.

The wage cap increases most years. In 2023 it was $160,200. In 2022 it was $147,000. The Social Security Administration announces the new cap in October for the following year, based on how much average wages rose.

How Medicare tax works

Medicare tax is 1.45% of your gross wages with no upper limit. Unlike Social Security, there is no wage cap — you pay Medicare tax on every dollar you earn, no matter how much that is. Your employer withholds this from your paycheck and sends it to the Centers for Medicare and Medicaid Services.

High earners pay an additional 0.9% Medicare tax on wages above $200,000 (if single) or $250,000 (if married filing jointly). This extra tax started in 2013 and funds the Affordable Care Act. Your employer withholds this additional tax automatically once you cross the threshold.

Medicare tax funds hospital insurance (Part A) for people age 65 and older, as well as some younger people with disabilities or end-stage renal disease. Unlike Social Security, Medicare tax does not have a wage cap, so high earners contribute more in absolute dollars.

What self-employed people pay

If you are self-employed, you pay both the employee and employer share of FICA tax — the full 15.3%. You calculate this on Schedule SE (Self-Employment Tax) when you file your tax return. The calculation is based on your net self-employment income, not your gross revenue.

The good news is that you can deduct half of your self-employment tax as a business expense on your Form 1040. This reduces your taxable income. For example, if you owe $3,000 in self-employment tax, you deduct $1,500 from your income before calculating your income tax.

You still pay the same wage cap for Social Security — $168,600 in 2024. Once your net self-employment income reaches that amount, you stop paying the 6.2% Social Security portion but continue paying 1.45% Medicare tax on all remaining income.

FICA tax on your pay stub

Your pay stub shows FICA tax in two or three lines. You will see "Social Security" or "OASDI" (Old Age, Survivors, and Disability Insurance) at 6.2%, and "Medicare" at 1.45%. Some pay stubs combine these into one line labeled "FICA." If you earn over the Medicare threshold, you may also see "Additional Medicare Tax" or "Medicare Surtax" at 0.9%.

These amounts are calculated on your gross pay before other deductions like health insurance or 401(k) contributions. FICA tax is withheld before federal income tax, so your FICA amount does not change based on your tax bracket or filing status.

If you have multiple jobs, you may overpay Social Security tax because each employer withholds 6.2% up to $168,600 without knowing about your other jobs. You can claim a refund of the overpayment when you file your tax return on Form 1040.

How FICA tax changes year to year

The Social Security wage cap changes almost every year. The Social Security Administration calculates it based on the average wage index — essentially, how much the average American worker earned that year. If wages rise, the cap rises. If wages stay flat, the cap stays the same.

The tax rates themselves (6.2% for Social Security, 1.45% for Medicare, 0.9% additional Medicare) have not changed since 1983 for Social Security and 2013 for the additional Medicare tax. Congress would have to pass new legislation to change these rates.

The wage cap for 2024 is $168,600. For 2023 it was $160,200. For 2022 it was $147,000. You can find the current and past wage caps on the Social Security Administration website.

Frequently Asked Questions

What happens to FICA tax money?

Social Security tax funds current benefits for retirees, disabled workers, and survivors. Medicare tax funds hospital insurance for people 65 and older and some younger people with disabilities. These are not savings accounts — the money you pay in this year goes out to current beneficiaries, not into an account with your name on it.

Can I avoid paying FICA tax?

No. FICA tax is mandatory for all employees and self-employed people. Some religious groups have exemptions from self-employment tax, but these are rare and require IRS approval. You cannot opt out of FICA tax by claiming dependents or changing your W-4.

Do I get FICA tax back on my refund?

FICA tax is separate from income tax and does not come back as a refund. However, if you overpaid Social Security tax (for example, by working multiple jobs), you can claim the overpayment as a credit on your Form 1040 when you file.

Why do I pay FICA tax if I am not old enough for Social Security?

You pay into Social Security now so you will have benefits when you retire. You also pay Medicare tax to fund hospital insurance you may use later. Additionally, Social Security provides disability and survivor benefits to younger people, so your tax contributions help fund those programs too.

Does FICA tax explore to all income?

FICA tax applies to wages and self-employment income. It does not explore to investment income, interest, dividends, or capital gains. If you have a job and also earn money from investments, you pay FICA only on the job income.