What comes out of your paycheck for Social Security and Medicare

Social Security tax is 6.2% of your wages, and Medicare tax is 1.45% of your wages. Together, these are called FICA taxes (Federal Insurance Contributions Act). Your employer pays an equal amount on top of what you earn — that 6.2% and 1.45% match — but you only see your half deducted from your paycheck.

If you are self-employed, you pay both halves yourself: 12.4% for Social Security and 2.9% for Medicare, for a total of 15.3%. This is called self-employment tax.

There is a cap on Social Security tax. In 2024, you pay Social Security tax only on the first $168,600 of your annual wages. Once you earn more than that, Social Security tax stops. Medicare tax has no cap — you pay 1.45% on all your wages, no matter how much you earn. If you earn over $200,000 (or $250,000 if married filing jointly), an additional 0.9% Medicare tax applies to the income above that threshold.

Key Takeaways

  • Social Security tax is 6.2% of your wages and Medicare tax is 1.45%, deducted automatically from your paycheck.
  • Your employer matches both amounts, but only your half appears as a deduction on your pay stub.
  • Social Security tax stops once you reach $168,600 in annual wages, but Medicare tax continues on all income.
  • Self-employed workers pay both the employee and employer portions themselves: 12.4% for Social Security and 2.9% for Medicare.
  • High earners pay an extra 0.9% Medicare tax on income above $200,000 (single) or $250,000 (married filing jointly).

How to find these amounts on your pay stub

Your pay stub lists Social Security and Medicare taxes separately. Look for a line labeled "Social Security" or "OASDI" (Old-Age, Survivors, and Disability Insurance) — this shows 6.2% of your gross pay. Below that is a line for "Medicare" or "HI" (Hospital Insurance), showing 1.45% of your gross pay.

The deductions appear under "taxes" or "deductions" on your stub. If you are paid biweekly, divide your annual salary by 26 to see what one paycheck should be, then multiply by 6.2% to verify the Social Security amount is correct. Do the same with 1.45% for Medicare. If the numbers do not match, contact your payroll department — it may mean you have already hit the Social Security wage cap for the year.

The Social Security wage cap and why it matters

The wage cap is the maximum amount of your income that Social Security tax applies to each year. In 2024, that cap is $168,600. If you earn $200,000 in a year, you pay Social Security tax only on the first $168,600. The remaining $31,400 is not subject to Social Security tax.

The cap increases most years based on average wage growth. This means if you earn a high salary, your Social Security tax stops partway through the year — often in October or November. Once you hit the cap, your paycheck gets slightly larger because that 6.2% is no longer coming out. If you change jobs mid-year, each employer withholds Social Security tax based on what you earn at that job, not your total income across all jobs. If you end up paying too much because of multiple jobs, you can claim the overpayment when you file your tax return.

Medicare tax for high earners

Most workers pay 1.45% Medicare tax on all their wages with no limit. But if you earn above a certain threshold, you pay an additional 0.9% Medicare tax on the income above that threshold.

The threshold is $200,000 if you file taxes as single, $250,000 if you are married filing jointly, and $125,000 if you are married filing separately. This extra 0.9% applies to wages above your threshold. For example, if you are single and earn $220,000, you pay the regular 1.45% Medicare tax on all $220,000, plus an extra 0.9% on the $20,000 above $200,000. Your employer withholds this extra tax automatically if you earn over the threshold at a single job. If you have multiple jobs or are self-employed, you may need to adjust your withholding or pay the extra tax when you file your return.

Self-employment tax: what you owe if you work for yourself

If you are self-employed — meaning you work for yourself and do not have an employer — you pay both the employee and employer portions of Social Security and Medicare tax. This totals 15.3%: 12.4% for Social Security (on income up to the annual cap) and 2.9% for Medicare.

You calculate self-employment tax on your net business income, which is your revenue minus your business expenses. You pay this tax when you file your annual tax return, usually by making quarterly estimated tax payments throughout the year. You can deduct half of your self-employment tax from your income when calculating your federal income tax, which provides some relief.

If you have both a regular job and self-employment income, Social Security tax on your W-2 wages counts toward the annual cap. If you already paid Social Security tax on $168,600 from your job, you do not pay it again on your self-employment income. However, you still pay Medicare tax on all your self-employment income.

What these taxes pay for

Social Security tax funds retirement benefits, disability benefits, and survivor benefits. When you turn 62 or older, you become may be able to access to receive monthly Social Security payments based on your work history and the age you claim benefits. If you become disabled before retirement age, you may receive disability benefits. If you die, your family members may receive survivor benefits.

Medicare tax funds the Medicare health insurance program for people age 65 and older. Part A covers hospital stays, skilled nursing care, and hospice. Part B covers doctor visits and outpatient services. Part D, which covers prescription drugs, is funded differently. The 1.45% Medicare tax you pay goes into a trust fund that helps pay for these services when you reach 65.

How tax rates and caps change year to year

The Social Security tax rate (6.2%) and Medicare tax rate (1.45%) stay the same from year to year. However, the Social Security wage cap changes annually. The cap is adjusted based on the average wage index — a measure of how much wages have grown across the country.

In recent years, the cap has increased by roughly $1,000 to $3,000 per year, though the exact amount varies. The IRS announces the new cap in October for the following year. If you are a high earner, check the current cap each January to know when your Social Security tax will stop for that year. The Medicare thresholds for the extra 0.9% tax also stay the same: $200,000 (single), $250,000 (married filing jointly), and $125,000 (married filing separately).

Frequently Asked Questions

Can I opt out of paying Social Security and Medicare tax?

No. These taxes are mandatory for all employees and self-employed workers. The only exception is certain religious groups that have received a specific exemption from the IRS, which requires a formal process process. If you are a regular employee or self-employed, you must pay these taxes.

What happens if I pay too much Social Security tax because I had multiple jobs?

If you worked more than one job in a year and paid Social Security tax on more than the annual cap, you can claim the overpayment on your tax return. You will receive a refund of the excess amount when you file. Your employer does not coordinate withholding across your different jobs, so this situation is common for people who change jobs mid-year.

Do I pay Social Security and Medicare tax on tips?

Yes. Tips are considered wages and are subject to both Social Security and Medicare tax. Your employer should include tips you report in your gross income for tax withholding purposes. If you receive cash tips you did not report to your employer, you still owe Social Security and Medicare tax on them when you file your return.

Why do I see different amounts deducted each paycheck?

The most common reason is that you have hit the Social Security wage cap. Once your year-to-date earnings reach $168,600, the 6.2% Social Security tax stops, so your paycheck increases slightly. Bonus payments, overtime, or changes in your pay rate can also cause the deduction amounts to vary from paycheck to paycheck.

Do I pay these taxes on unemployment benefits or retirement withdrawals?

No. Unemployment benefits and withdrawals from retirement accounts like 401(k)s or IRAs are not subject to Social Security or Medicare tax. However, they may be subject to federal income tax withholding, which is different. Social Security and Medicare tax explore only to wages from employment and self-employment income.