FICA Taxes Explained: Social Security and Medicare on Your Paycheck

FICA — Federal Insurance Contributions Act — taxes fund two federal programs: Social Security (officially Old Age, Survivors, and Disability Insurance) and Medicare (officially Hospital Insurance). Unlike federal income tax, FICA is a flat rate with no standard deduction. Every dollar of wages is subject to FICA up to the applicable wage base.

The 2026 FICA rates

Tax	Employee rate	Employer match	Wage cap
Social Security	6.2%	6.2%	$184,500
Medicare	1.45%	1.45%	None
Total FICA	7.65%	7.65%	—

On a $58,000 salary, FICA totals $4,437 per year: $3,596 for Social Security (6.2% × $58,000) and $841 for Medicare (1.45% × $58,000). Your employer pays an identical $4,437 on your behalf, making the true all-in employment cost $62,437 — though only the employee share appears as a deduction on your paycheck.

The Social Security wage base

Social Security tax applies only to wages up to $184,500 in 2026. Once your wages cross this threshold during the year, Social Security withholding stops automatically. Workers earning above the wage base see their Social Security withholding end part-way through the year, which can create a noticeable paycheck increase in the second half of the year.

Medicare has no equivalent wage base cap — the 1.45% rate applies to every dollar earned, with no ceiling.

Additional Medicare Tax

If your wages exceed $200,000 in a year (for single filers) or $250,000 (married filing jointly), an additional 0.9% Medicare tax applies to the excess. Your employer is required to begin withholding this once your wages from that employer cross $200,000, regardless of your filing status. If you are married and your combined wages exceed $250,000, the full Additional Medicare Tax may not be withheld during the year — you may owe it when you file.

What reduces your FICA wages?

Fewer deductions reduce FICA wages than most workers assume:

• Traditional 401(k) contributions do NOT reduce FICA wages. They reduce federal and most state income tax wages, but Social Security and Medicare are calculated on gross pay before any 401(k) deferral.
• Section 125 cafeteria plan deductions DO reduce FICA wages. Employer-sponsored health insurance premiums, health FSA contributions, and dependent care FSA contributions paid through a qualifying Section 125 plan reduce both federal income tax wages and FICA wages. This is one reason employer-sponsored health insurance is more tax-efficient than individual-market coverage.
• HSA contributions via payroll deduction reduce FICA wages when run through a Section 125 plan. Direct HSA contributions (made outside payroll) do not reduce FICA — they only reduce income tax through a Schedule 1 deduction.

Self-employed workers pay both sides

If you are a 1099 contractor, sole proprietor, or single-member LLC taxed as a sole proprietor, you pay both the employee and employer share of FICA as self-employment (SE) tax: 12.4% for Social Security (up to the wage base) and 2.9% for Medicare, totaling 15.3%.

The IRS provides a deduction: self-employed workers can deduct the employer-equivalent half (7.65%) as an above-the-line deduction on Schedule 1, reducing the income tax impact but not the SE tax itself. Net effective SE tax rate after the deduction is approximately 14.1% of net self-employment income.

Why FICA is capped for Social Security but not Medicare

Social Security benefits themselves are subject to an earnings-based maximum — the maximum monthly benefit is tied to lifetime earnings up to the taxable maximum. A wage base cap on contributions mirrors this benefit cap. Medicare benefits, in contrast, are not earnings-dependent — every covered person receives the same hospital insurance coverage, which is why there is no cap on Medicare tax.

Frequently asked questions

Does my employer pay FICA on my behalf?

Yes. Your employer matches your 6.2% Social Security and 1.45% Medicare contributions dollar for dollar. The employer share does not appear on your pay stub — it is paid separately by your employer. The combined rate (employee + employer) is 15.3%.

Is there a way to avoid FICA?

FICA applies to all wage income. The only compensation types exempt from FICA include certain student work-study wages, some temporary non-immigrant visa categories, and ministerial income in specific circumstances. Standard employees and self-employed workers cannot opt out.

What happens if I work for two employers and earn more than the Social Security wage base across both jobs?

Each employer withholds Social Security independently and does not know about your other employer. If your combined wages from both employers exceed $184,500, you will over-withhold Social Security during the year. You recover the excess withheld employee Social Security tax as a credit on your federal return (Schedule 3, Line 11).