What Is FICA Tax? Social Security & Medicare Explained

FICA stands for the Federal Insurance Contributions Act. It's the law that requires employers and employees to each pay into Social Security and Medicare.

For 2026, FICA consists of two parts:

• Social Security Tax: 6.2% on wages up to $176,100
• Medicare Tax: 1.45% on all wages (no cap)

Your employer matches these contributions dollar-for-dollar — meaning the true cost of FICA is 15.3% of your wages, split evenly between you and your employer.

Social Security tax (6.2%) only applies to wages up to a certain ceiling — the Social Security wage base.

2026 Social Security Wage Base: $176,100

This means:

• If you earn $60,000, you pay 6.2% on all $60,000 = $3,720
• If you earn $200,000, you pay 6.2% on only $176,100 = $10,918

Once you hit the wage base mid-year, Social Security withholding stops. High earners often notice a larger paycheck in the second half of the year as a result.

The Affordable Care Act introduced an Additional Medicare Tax of 0.9% on wages above certain thresholds. Unlike regular Medicare, this extra tax is only paid by the employee.

2026 Additional Medicare Tax Thresholds:

• Single filers: 0.9% on wages over $200,000
• Married filing jointly: 0.9% on wages over $250,000

Example: Single filer earning $250,000: Regular Medicare $3,625 + Additional Medicare $450 = Total Medicare: $4,075

If you are self-employed, you pay the full 15.3% self-employment (SE) tax instead of the 7.65% that regular employees pay.

2026 Self-Employment Tax:

• 12.4% Social Security (on net earnings up to $176,100)
• 2.9% Medicare (on all net earnings)
• = 15.3% total SE tax

However, self-employed individuals can deduct half of their SE tax from their gross income when calculating federal income tax.

Use our self-employment tax calculator to estimate your SE tax liability.

FICA taxes fund two specific federal programs:

Social Security (OASDI): Funds retirement benefits, disability insurance (SSDI), and survivor benefits. The amount you receive in retirement is based on your 35 highest-earning years. You need at least 40 work credits (roughly 10 years of work) to qualify.

Medicare: Funds health insurance for Americans 65 and older. Medicare Part A (hospital insurance) is largely funded by your FICA Medicare contributions. Part B (medical insurance) and Part D (prescriptions) require separate premium payments in retirement.