What Are FICA Taxes and How Are They Calculated?
Last updated: June 2026
Every paycheck you receive shows two deductions that often go unnoticed: Social Security and Medicare. Together, these are your FICA taxes — and unlike federal income tax, you cannot reduce them by updating your W-4. Here is exactly what FICA is, how it is calculated, and what it means for your take-home pay.
What Is FICA?
FICA stands for the Federal Insurance Contributions Act. Passed in 1935 alongside the creation of Social Security, it establishes mandatory payroll taxes that fund two federal benefit programs:
- Social Security (OASDI) — Old-Age, Survivors, and Disability Insurance
- Medicare (HI) — Hospital Insurance for retirees and qualifying disabled individuals
Every employer is legally required to withhold FICA taxes from employee wages and remit them to the IRS. Employers also pay a matching contribution out of their own pocket — meaning the government receives twice the amount shown on your stub.
2024 FICA Tax Rates at a Glance
Social Security: The Wage Base Cap
The Social Security tax only applies to wages up to a certain annual threshold called the wage base. Once your earnings exceed that limit in a calendar year, Social Security withholding stops entirely for the remainder of the year. The wage base has risen steadily:
- 2023: $160,200
- 2024: $168,600 — an increase of $8,400
A worker earning exactly $168,600 in 2024 will pay $10,453.20 in Social Security tax (6.2% × $168,600). Any wages earned beyond that point in the same year are Social Security–free.
Medicare: No Cap, Plus a Surtax for High Earners
Unlike Social Security, the 1.45% Medicare tax applies to every dollar of wages with no upper limit. High earners face an additional layer: the Additional Medicare Tax of 0.9% applies to wages exceeding:
- $200,000 for single filers, heads of household, and qualifying widowers
- $250,000 for married filing jointly
- $125,000 for married filing separately
Employers are required to withhold the extra 0.9% once wages exceed $200,000 in a calendar year, regardless of filing status. If you are married and your combined household income will push you over $250,000, you may owe additional Medicare Tax on your return even if your employer did not withhold it.
Step-by-Step Calculation: $75,000 Annual Salary
Let's walk through a complete FICA calculation for an employee earning $75,000 per year paid bi-weekly (26 pay periods).
Per-Paycheck Gross Wages
$75,000 ÷ 26 = $2,884.62 per paycheck
| Tax | Rate | Per Paycheck | Annual Total |
|---|---|---|---|
| Social Security | 6.2% | $178.85 | $4,650.00 |
| Medicare | 1.45% | $41.83 | $1,087.50 |
| Total FICA (Employee) | 7.65% | $220.68 | $5,737.50 |
Because $75,000 is well below the $168,600 Social Security wage base and well below the $200,000 Additional Medicare Tax threshold, the standard rates apply for the entire year with no phaseouts.
Why Your W-4 Does Not Affect FICA
Many employees assume that changing their W-4 will reduce all withholding — including Social Security and Medicare. This is a common misconception.
Your W-4 instructs your employer how much federal income tax to withhold based on your filing status, dependents, and any additional amounts you request. FICA taxes are governed by a separate law — the Federal Insurance Contributions Act — and are calculated as a fixed percentage of gross wages. There is no form, no adjustment, and no exemption that can reduce FICA for a regular employee.
The only legal ways to avoid FICA are narrow exceptions: certain student workers, some religious order members, and workers in specific government positions covered under alternative retirement systems. For the vast majority of employees, FICA is non-negotiable.
Self-Employed? You Pay Both Halves
If you work as a freelancer, independent contractor, or sole proprietor, you are simultaneously the employee and the employer. That means you owe both halves of FICA, which is called self-employment (SE) tax:
- Social Security: 12.4% (up to the $168,600 wage base in 2024)
- Medicare: 2.9% (no cap)
- Total SE tax: 15.3%
The IRS does offer two partial offsets to ease this burden:
- SE tax is calculated on 92.35% of net self-employment income (not 100%), because employees do not pay FICA on the employer's matching share.
- You can deduct half of your SE tax as an above-the-line deduction on Schedule 1, reducing your federal income tax liability.
For example, a self-employed person with $80,000 in net earnings pays SE tax on $73,880 (92.35% × $80,000), resulting in approximately $11,304 in SE tax. They can then deduct roughly $5,652 from their taxable income.
See Your Exact FICA Deductions
Use our free calculator to see Social Security, Medicare, federal income tax, and net pay — all in one place. Supports all 50 states.
Try the Federal Paycheck Calculator →Frequently Asked Questions
What does FICA stand for?
FICA stands for the Federal Insurance Contributions Act. It is the U.S. federal law that mandates payroll deductions to fund Social Security and Medicare programs.
What is the FICA tax rate for employees in 2024?
Employees pay 6.2% for Social Security on wages up to $168,600, plus 1.45% for Medicare on all wages, for a combined FICA rate of 7.65%. Employers pay an identical matching amount.
Is there a wage limit on FICA taxes?
Yes, but only for the Social Security portion. The 2024 Social Security wage base is $168,600 — wages above that are not subject to the 6.2% Social Security tax for the rest of the calendar year. Medicare has no wage base cap; the 1.45% rate applies to all earnings indefinitely. High earners also pay an additional 0.9% Medicare surtax on wages above $200,000 (single filers).
Can I reduce my FICA taxes by changing my W-4?
No. FICA taxes are set by federal law and are not affected by W-4 withholding elections. Your W-4 only controls federal income tax withholding. FICA is calculated as a flat percentage of gross wages regardless of your filing status or allowances claimed.
How much FICA tax does a self-employed person pay?
Self-employed individuals pay the full 15.3% self-employment tax — 12.4% for Social Security and 2.9% for Medicare — because they act as both employer and employee. They can deduct half of this amount (the employer-equivalent portion) on their federal income tax return, reducing their overall tax burden.