FICA Tax Explained: What It Is, How It's Calculated, and What You Owe in 2026

If you've ever looked at your pay stub and wondered why money is being deducted for "Social Security" and "Medicare" — those are FICA taxes. The Federal Insurance Contributions Act (FICA) is one of the most consistent and unavoidable payroll taxes in the American tax system, affecting nearly every worker and every employer.

Yet despite its universal application, FICA is widely misunderstood. Many workers don't know exactly how much they're paying, when it stops being withheld in a year, or what the "Additional Medicare Tax" on their W-2 means. And many employers miscalculate it, especially when dealing with bonuses, high earners, or self-employed workers.

This guide explains FICA taxes completely — the rates, the wage bases, worked examples for employees and self-employed workers, and everything that changed for 2026.

What Is FICA Tax?

FICA stands for the Federal Insurance Contributions Act, a federal law enacted in 1935 that established a payroll tax to fund two critical federal programs:

1. Social Security (OASDI — Old-Age, Survivors, and Disability Insurance): Provides retirement income for qualifying workers and their families, disability benefits for workers who can no longer work, and survivor benefits for spouses and dependents of deceased workers.

2. Medicare (HI — Hospital Insurance): Funds the Medicare program, which provides health coverage to Americans aged 65 and older and to certain younger people with qualifying disabilities.

FICA is a shared tax — both the employee and employer each contribute an equal portion. For most workers, this means:

• Employee pays FICA: deducted from each paycheck
• Employer pays FICA: paid separately by the business (NOT deducted from the employee's pay)

Self-employed individuals — sole proprietors, freelancers, and independent contractors — must pay both halves themselves through the Self-Employment (SE) tax.

Quick Calculator: Use our FICA tax calculator to instantly calculate your exact Social Security and Medicare withholdings for any pay level, including Additional Medicare Tax on high-income wages.

FICA Tax Rates in 2026

Social Security Tax (OASDI)

Party	Rate
Employee	6.2%
Employer	6.2%
Combined total	12.4%

2026 Wage Base Limit: $176,100

Social Security tax applies only to wages up to the annual wage base limit. Once a worker earns $176,100 in a calendar year (from a single employer), Social Security withholding stops for the remainder of that year. The wage base is adjusted annually by the Social Security Administration based on changes in average wages nationally.

What this means in practice: A worker who earns exactly $176,100 by late October or November will see their Social Security withholding stop — and their take-home pay will increase by 6.2% for the remaining paychecks of the year.

Medicare Tax (HI)

Party	Rate
Employee	1.45%
Employer	1.45%
Combined total	2.9%

Wage base limit: None — Medicare applies to all wages without cap.

Additional Medicare Tax (ACA Surtax)

High-income workers are subject to an additional 0.9% Medicare tax on wages exceeding certain thresholds:

Filing Status	Threshold
Single, Head of Household, Qualifying Widow(er)	$200,000
Married Filing Jointly	$250,000
Married Filing Separately	$125,000

Key facts about the Additional Medicare Tax:

• It is an employee-only tax — the employer does NOT match the 0.9%
• Employers are required to begin withholding when a single employee's wages from that employer exceed $200,000, regardless of the employee's filing status
• If the employer's withholding doesn't match the employee's actual liability (e.g., married filing separately with a $125,000 threshold, but both spouses earn $160,000 each), the employee reconciles this on their Form 1040

Summary of all FICA rates:

Rate Type	Rate	Who Pays
Social Security — Employee	6.2%	Employee
Social Security — Employer	6.2%	Employer
Medicare — Employee	1.45%	Employee
Medicare — Employer	1.45%	Employer
Additional Medicare Tax	0.9%	Employee only (high earners)
Total employee FICA (standard)	7.65%
Total employer FICA (standard)	7.65%
Combined FICA (standard)	15.3%	Both

How FICA Is Calculated: Step-by-Step

Let's walk through the FICA calculation for a few different scenarios.

Scenario 1: Standard Employee — Annual Salary $65,000

Pay frequency: Bi-weekly (26 pay periods/year) Gross pay per period: $65,000 ÷ 26 = $2,500.00

Tax	Rate	Amount Per Period
Social Security (employee)	6.2%	$2,500 × 0.062 = $155.00
Medicare (employee)	1.45%	$2,500 × 0.0145 = $36.25
Total employee FICA per period	7.65%	$191.25

Annual employee FICA:

• Social Security: $65,000 × 6.2% = $4,030
• Medicare: $65,000 × 1.45% = $942.50
• Total employee FICA: $4,972.50/year

Employer FICA (business cost, not deducted from employee):

• Same amount: $4,972.50/year

Combined FICA on this employee: $9,945/year (employee + employer)

Scenario 2: High Earner — Annual Salary $240,000

Pay frequency: Semi-monthly (24 pay periods/year) Gross pay per period: $240,000 ÷ 24 = $10,000.00

Social Security:

• Wage base limit: $176,100
• Social Security stops when cumulative earnings reach $176,100
• $176,100 × 6.2% = $10,918.20 total Social Security for the year
• This happens mid-year; once wages reach $176,100, SS withholding stops for the remaining paychecks

Medicare (no wage base cap):

• Standard Medicare: $240,000 × 1.45% = $3,480.00
• Additional Medicare Tax: ($240,000 − $200,000) × 0.9% = $40,000 × 0.9% = $360.00
• Total Medicare employee: $3,840.00

Employee FICA total:

• Social Security: $10,918.20
• Medicare + Additional Medicare: $3,840.00
• Total: $14,758.20

Employer FICA total:

• Social Security: $10,918.20 (employer matches, up to the same wage base)
• Standard Medicare: $3,480.00 (employer does NOT match the additional 0.9%)
• Total employer FICA: $14,398.20

Scenario 3: Self-Employed — Net Income $80,000

Self-employed individuals pay the Self-Employment (SE) tax, which covers both the employee and employer halves of FICA at a combined rate of 15.3% (12.4% SS + 2.9% Medicare).

However, there is a small adjustment because employees' FICA is calculated on gross wages, while SE tax is calculated on net self-employment income minus the employer-equivalent portion. The adjustment works as follows:

Step 1: Calculate 92.35% of net SE income: $80,000 × 92.35% = $73,880

(The 92.35% factor accounts for the fact that an employee's wages are reduced by the employer's FICA before the employee's share is calculated.)

Step 2: Apply the SE tax rate: $73,880 × 15.3% = $11,303.64

This breaks down as:

• Social Security portion: $73,880 × 12.4% = $9,161.12
• Medicare portion: $73,880 × 2.9% = $2,142.52

Step 3 (tax deduction): The self-employed worker can deduct 50% of SE tax as a business expense: $11,303.64 × 50% = $5,651.82 deductible from adjusted gross income

This deduction partially offsets the "double burden" of paying both halves.

Important: At $80,000 net income, the Social Security wage base ($176,100) is not a concern. At higher income levels, the 12.4% SS rate would stop applying once the SE income hits the wage base.

The Social Security Wage Base: Historical Context and 2026 Update

The Social Security wage base is not fixed — it adjusts annually based on changes in national average wage levels. Here's recent history:

Year	SS Wage Base
2020	$137,700
2021	$142,800
2022	$147,000
2023	$160,200
2024	$168,600
2025	$176,100
2026	$176,100 (estimated — subject to SSA announcement)

Practical implication: In the 1990s, only top earners hit the wage base. Today, at $176,100, a significant number of professional workers reach the cap annually and experience that "raise" in their net take-home pay for Q4. High-earning employees and their employers should plan for this shift in their Q4 cash flow.

FICA and Bonuses

FICA applies to wages in the period they are paid — including supplemental wages like bonuses. If an employee receives a $10,000 year-end bonus:

• Social Security: 6.2% × $10,000 = $620 (employee) — only if the employee has not yet reached the wage base for the year
• Medicare: 1.45% × $10,000 = $145 (employee)
• Additional Medicare: 0.9% × $10,000 = $90 (if applicable)

The bonus does not change the annual FICA calculation — it's simply taxed at the applicable rates in the pay period it's received.

FICA for Employees With Multiple Jobs

If you work two jobs and earn wages from both employers, each employer withholds Social Security independently. If the combined wages from both jobs exceed the Social Security wage base, you may have excess Social Security withholding.

Example:

• Job 1 wages: $130,000 → Social Security withheld: $130,000 × 6.2% = $8,060
• Job 2 wages: $80,000 → Social Security withheld on first $46,100 (up to the total $176,100 cap): $46,100 × 6.2% = $2,858.20

Total SS withheld: $10,918.20 — correct (matches the wage base calculation)

However, if Job 1 withheld $8,060 and Job 2 withheld $4,960 (on $80,000 without knowing about the other job):

• Total withheld: $13,020
• SS tax owed: $10,918.20
• Excess SS withheld: $2,101.80 — claimed as a credit on Form 1040

Employers are not required to coordinate their withholding with other employers. The reconciliation happens on the worker's annual tax return.

FICA Exemptions: Who Doesn't Pay?

While FICA applies to the vast majority of workers, certain groups are exempt or have special rules:

Students: Students employed by their own university in a work-study arrangement are generally exempt from FICA if they are enrolled at least half-time.

Foreign workers on certain visas: Workers on F-1, J-1, M-1, or Q-1 visas (nonresident alien students, exchange visitors, etc.) are generally exempt from FICA during their period of authorized stay.

Railroad workers: Railroad employees pay the Railroad Retirement Tax Act (RRTA) taxes instead of FICA — a parallel system with different rates.

Some government employees: Certain state and local government employees, particularly those enrolled in alternative pension systems, may be exempt from Social Security (but not Medicare) under Section 218 agreements.

Household employees: Household employers pay FICA only on wages above a threshold ($2,700 in 2026). Below this threshold, FICA is not required.

What Your FICA Taxes Fund

Understanding what FICA pays for makes the deduction feel less abstract:

Social Security (12.4% combined):

• 10.6% funds Old-Age and Survivors Insurance (OASI) — retirement and survivor benefits
• 1.8% funds Disability Insurance (DI) — benefits for workers with qualifying disabilities

Medicare (2.9% combined):

• 2.9% funds Hospital Insurance (HI) — Medicare Part A (hospital coverage)
• The Additional Medicare Tax (0.9%) flows to general Medicare funding

Every quarter you work and earn wages, you accumulate Social Security credits (up to 4 per year). To qualify for retirement benefits, most workers need 40 credits (10 years of work). Your eventual benefit amount is based on your highest 35 years of indexed earnings.

Key Takeaways

• FICA = Social Security (6.2%) + Medicare (1.45%) = 7.65% employee rate + 7.65% employer rate
• Social Security wage base in 2026: $176,100 — withholding stops after this threshold
• Medicare has no wage base — applies to all wages
• High earners (over $200k single/$250k married) owe an additional 0.9% Additional Medicare Tax (employee only)
• Self-employed workers pay the full 15.3% SE tax but deduct 50% of it as a business expense
• Workers with two jobs may have excess Social Security withheld — claim the credit on Form 1040
• The social security wage base adjusts annually — plan for the mid-year "bonus" when withholding stops for high earners

Use our FICA tax calculator to compute your exact Social Security and Medicare taxes for any income level, pay frequency, and filing scenario — including the wage base cutoff and Additional Medicare Tax threshold.