The Federal Insurance Contributions Act (FICA) tax is a payroll tax which is withheld from employee wages and matched by the employer.
The FICA tax is composed of a Social Security tax and a Medicare tax. The Social Security Administration caps the amount of gross income subject to the Social Security tax. However, there is no wage limit on Medicare taxes.
Currently (as of 2024), the Social Security tax is 6.2% withheld from wages up to $168,600. The current Medicare tax is 1.45% on wages, with no limit. The total FICA tax withheld from an employee with wages under $168,600 is thus 7.65%. The employer must match this amount, so the total FICA split between the employer and employee is currently 15.3% of the employee’s wages.
For example, suppose an employee is currently under the Social Security Wage limit. The employee’s wages for a pay period are $2,000. The employer must withhold $2000 x 7.65% = $153 from the employee’s check. In addition, the employer must match the $153 withheld from the employee’s check. So, in total, the employer must send $306 in FICA tax to the Internal Revenue Service.
Beginning in 2013, higher income employees pay an additional Medicare tax on earnings.
Self-employed individuals must also pay the FICA tax. However, self-employed individuals are responsible for the full 15.3% of self-employed income.
