FICA taxes are mandatory U.S. payroll taxes that fund Social Security and Medicare. Established by the Federal Insurance Contributions Act, they are split between employees and employers, with each side paying 7.65% of wages. The money supports retirement, disability, and hospital insurance programs that workers draw on later in life.
FICA is the payroll tax that keeps Social Security and Medicare running. Every paycheck for most U.S. workers has FICA withheld, and employers contribute a matching amount. Unlike federal income tax, which varies with a person’s filing status and allowances, FICA is a flat percentage of wages up to certain limits. The withheld amount reduces an employee’s net pay and shows up as a line item on the pay stub.
FICA has two parts:
Together that is 7.65% from the worker and 7.65% from the company, for a combined 15.3%. Self-employed people pay both halves themselves through the SECA tax. The employer’s share is part of broader employer payroll taxes that companies remit to the IRS.
Sofia earns $4,000 in gross pay for a pay period. Her FICA withholding is 7.65% of that, or $306. Of this, $248 goes to Social Security (6.2%) and $58 goes to Medicare (1.45%). Her employer matches the full $306, so a total of $612 flows to the federal programs for that period. Over a full year at that pay, Sofia and her employer together send several thousand dollars to Social Security and Medicare. Certain non-cash benefits counted as imputed income can also be subject to FICA, so the taxable base is sometimes larger than base wages alone.
FICA stands for the Federal Insurance Contributions Act, the law that funds Social Security and Medicare through payroll taxes.
The combined FICA rate is 15.3%, split evenly so the employee pays 7.65% and the employer pays 7.65%. That breaks into 6.2% for Social Security and 1.45% for Medicare on each side.
Yes. Employers match the employee’s FICA contribution dollar for dollar, making it a shared payroll tax.
