What comes out of your paycheck for Social Security and Medicare

Social Security and Medicare taxes are withheld from your paycheck as FICA taxes — the acronym stands for Federal Insurance Contributions Act. In 2024, you pay 6.2% of your gross wages for Social Security and 1.45% for Medicare, totaling 7.65%. Your employer matches those amounts and sends both portions to the federal government. If you are self-employed, you pay both the employee and employer share, which comes to 15.3% of your net business income.

These are not optional deductions and not based on your tax bracket. They come out the same way for everyone, regardless of income level — though Social Security tax stops once you hit the annual wage cap, which changes each year. Medicare tax, by contrast, has no cap: you pay 1.45% on every dollar you earn, no matter how much you make.

Key Takeaways

  • You pay 6.2% for Social Security and 1.45% for Medicare from each paycheck, with your employer matching both amounts.
  • Social Security tax stops once your annual wages reach the wage base limit, which was $168,600 in 2024 but changes yearly.
  • Medicare tax has no wage cap and continues on all earnings throughout the year.
  • If you earn over $200,000 as a single filer (or $250,000 married filing jointly), you pay an additional 0.9% Medicare tax on the amount above that threshold.
  • Self-employed people pay both the employee and employer portions, totaling 15.3% for Social Security and Medicare combined.

The Social Security tax rate and wage cap

The Social Security tax rate has been fixed at 6.2% since 1990. What changes year to year is the wage base limit — the maximum amount of your annual income that is subject to the tax. Once you earn more than that limit in a calendar year, Social Security tax stops being withheld from your paychecks for the rest of the year.

In 2024, the wage base limit is $168,600. This means if you earn $168,600 or less in the year, you pay 6.2% on all of it. If you earn $200,000, you pay 6.2% only on the first $168,600 and nothing on the remaining $31,400. The limit increases most years because it is tied to the national average wage index — when average wages go up, the cap goes up too.

This wage cap applies only to Social Security, not Medicare. Your employer is required to stop withholding Social Security tax once the limit is reached, so you should see that change reflected in your pay stub once you cross the threshold.

Medicare tax with no wage cap

Medicare tax is 1.45% of your gross wages, and there is no annual limit. You pay it on every dollar you earn, whether you make $30,000 or $300,000 in a year. Your employer withholds 1.45% and matches it, sending 2.9% total to Medicare.

However, if your income exceeds certain thresholds, you owe an additional Medicare tax of 0.9%. For 2024, this extra tax applies to wages over $200,000 if you file as single, $250,000 if you file as married filing jointly, or $125,000 if you file as married filing separately. Your employer is required to withhold this additional 0.9% once you cross your threshold, so it appears as a separate line item on your pay stub.

This additional tax was introduced in 2013 as part of the Affordable Care Act and has remained in place since. It applies to wages, self-employment income, and certain investment income, though the investment income rules are more complex and may require adjustment when you file your tax return.

How self-employed people calculate their FICA taxes

If you are self-employed, you pay both the employee and employer portions of FICA taxes. That means 12.4% for Social Security (instead of 6.2%) and 2.9% for Medicare (instead of 1.45%), totaling 15.3% on your net self-employment income.

You calculate this on Schedule SE, which is part of your federal tax return. The calculation uses your net profit from self-employment — your business income minus business expenses — not your gross revenue. The Social Security portion still has the same annual wage cap ($168,600 in 2024), so once your net self-employment income reaches that limit, you stop paying the 12.4% and pay only the 2.9% Medicare tax on income above it.

Self-employed people can deduct half of their self-employment tax when calculating their adjusted gross income, which provides some tax relief. You do not pay self-employment tax on income below $400, so very small side businesses may not owe it.

When your withholding changes during the year

Most people do not think about FICA taxes until they see them on a pay stub, but your withholding can shift at predictable points in the year. If you reach the Social Security wage cap before December, your take-home pay increases because that 6.2% stops being withheld. This is most common for people earning over $168,600 annually or those who change jobs mid-year.

If you have multiple jobs, you may overpay Social Security tax because each employer withholds 6.2% up to the wage base limit independently. If your combined income from all jobs exceeds the limit, you can claim a credit for the overpayment when you file your tax return — you do not get a refund, but the credit reduces your income tax owed.

The additional Medicare tax of 0.9% is withheld once you cross your income threshold, and your employer should track this. If you have multiple employers and your combined wages exceed the threshold, you may also overpay this tax and need to claim it on your return.

Understanding your pay stub and FICA deductions

Your pay stub breaks down FICA taxes into separate line items. You will typically see "Social Security Tax" or "OASDI" (Old-Age, Survivors, and Disability Insurance), "Medicare Tax," and possibly "Additional Medicare Tax" if your income is high enough. Each shows the amount withheld from that paycheck.

The amount withheld depends on your gross pay and your withholding status, not on how many dependents you claim or your filing status — those affect federal income tax withholding, which is separate. FICA taxes are calculated the same way regardless of your personal situation.

If you notice your FICA withholding has changed or stopped partway through the year, check whether you have reached the Social Security wage cap. If you think your withholding is wrong, contact your employer's payroll department. They can explain the calculation and correct any errors.

Frequently Asked Questions

Why do I still pay Medicare tax if I am over 65 and already on Medicare?

Medicare tax funds the program for everyone, not just current beneficiaries. You pay it throughout your working life, and it goes toward hospital insurance (Part A) for you and others. Even after you enroll in Medicare at 65, you continue paying the tax on any wages you earn from working.

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

No, FICA taxes are mandatory for all employees and self-employed people. The only exceptions are certain religious groups that have received a formal exemption from the IRS, and some government employees hired before specific dates who are covered by different retirement systems.

What happens if I overpay Social Security tax because I changed jobs?

If your combined Social Security tax from all employers exceeds what you owe for the year, you can claim the overpayment as a credit on your federal tax return. You file Form 1040 and claim the excess as a credit against your income tax — you do not receive a refund of the overpayment itself.

Does the Social Security wage cap change every year?

Yes, the wage base limit increases most years based on the national average wage index. The Social Security Administration announces the new limit in October for the following year. You can find the current and historical limits on the SSA website.

If I am self-employed, do I pay FICA taxes on my entire business income?

No, you pay self-employment tax on your net profit — your business income minus your business expenses. You do not owe self-employment tax on income below $400, and you can deduct half of your self-employment tax when calculating your adjusted gross income.