FICA taxes are Social Security and Medicare deductions taken from your paycheck

FICA stands for the Federal Insurance Contributions Act. It is the law that requires your employer to withhold money from your paycheck for two programs: Social Security and Medicare. The money does not go into a personal account with your name on it — it funds these programs for current retirees, disabled workers, and people on Medicare right now.

When you see your pay stub, FICA appears as two separate line items. Social Security withholding is 6.2 percent of your gross pay (the amount before deductions). Medicare withholding is 1.45 percent. If you are self-employed, you pay both the employee and employer portions, which doubles the rate to 15.3 percent total, though you can deduct half of it on your tax return.

FICA is different from federal income tax withholding, which also comes out of your paycheck but goes to a different purpose and uses a different calculation. You will see both on your pay stub.

Key Takeaways

  • FICA withholds 6.2 percent for Social Security and 1.45 percent for Medicare from each paycheck, totaling 7.65 percent for most workers.
  • Social Security money funds retirement, survivor benefits, and disability payments for current beneficiaries, not a personal savings account.
  • Medicare money funds hospital insurance (Part A) and is separate from the Medicare premiums you may pay later in retirement.
  • Self-employed workers pay the full 15.3 percent but can deduct half of it as a business expense on their tax return.
  • FICA withholding stops once you reach the Social Security wage cap, which changes each year; Medicare withholding continues on all income.

How Social Security withholding works

The 6.2 percent Social Security withholding is capped at a maximum wage amount that changes each year. In 2024, that cap is $168,600 of income — meaning once you earn that much in a calendar year, no more Social Security tax is withheld from your remaining paychecks that year. In 2025, the cap is $176,100. If you change jobs mid-year, each employer withholds based on what you have earned at that job alone, not your total income across all jobs, so you may overpay and claim a refund when you file your tax return.

The money you and your employer contribute goes into a trust fund that pays current Social Security benefits. When you reach retirement age (between 66 and 67 for most people born after 1960), you become may be able to access to receive a monthly benefit based on your earnings history and how long you worked. The amount is not a return of what you paid in — it is calculated by a formula that considers your 35 highest-earning years.

If you become disabled or die before retirement, your dependents or you may receive benefits sooner. Survivors of workers who die can receive benefits, and disabled workers under full retirement age can receive benefits when ready.

How Medicare withholding works

The 1.45 percent Medicare withholding has no wage cap — it applies to all your income, no matter how much you earn. This money funds Medicare Part A, which covers hospital stays, skilled nursing care, and some home health services. It does not cover doctor visits or prescriptions, which are covered under Part B and Part D and require separate premiums you pay when you turn 65.

There is an additional 0.9 percent Medicare tax on wages above a certain threshold ($200,000 for single filers, $250,000 for married filing jointly). Your employer withholds this automatically if your income exceeds the threshold. Unlike the standard 1.45 percent, this extra 0.9 percent is not matched by your employer — you pay it entirely.

The Medicare trust fund is separate from Social Security. When you turn 65, you become may be able to access for Medicare Part A automatically if you have worked and paid Medicare taxes for at least 10 years (40 quarters). You do not have to be retired to receive it.

The difference between FICA and federal income tax

FICA and federal income tax withholding are two separate deductions on your pay stub, and they fund different programs. FICA is a fixed percentage (7.65 percent for most workers) that goes to Social Security and Medicare. Federal income tax withholding is calculated based on the W-4 form you fill out with your employer and depends on your filing status, number of dependents, and other income.

Federal income tax goes to the general Treasury and funds government operations — defense, roads, courts, and other services. FICA money is earmarked specifically for Social Security and Medicare and cannot be used for other purposes.

When you file your tax return, you report both types of withholding. If too much was withheld overall, you get a refund. If too little was withheld, you owe money. FICA withholding is usually accurate because the rate is fixed, but federal income tax withholding can be off if your W-4 does not match your actual tax situation.

What happens if you are self-employed

If you work for yourself, you pay both the employee and employer portions of FICA, totaling 15.3 percent (12.4 percent for Social Security, 2.9 percent for Medicare). You calculate this as self-employment tax on Schedule SE when you file your tax return, and you owe it on net earnings of $400 or more per year.

The good news is that you can deduct half of your self-employment tax as a business expense on your tax return, which lowers your taxable income. You also get credit for the employer portion when calculating your Social Security benefit — the government counts it as if an employer had paid it on your behalf.

Self-employed workers do not have an employer to withhold taxes automatically, so many set aside money each quarter to pay estimated taxes, including self-employment tax. If you do not pay enough throughout the year, you may owe a penalty when you file.

FICA withholding for non-citizens and visa holders

Most workers in the United States, regardless of immigration status, pay FICA taxes if they are on a payroll. This includes people on work visas (H-1B, L-1, etc.), undocumented workers, and temporary residents. The withholding is the same percentage as for citizens.

However, some visa categories are exempt from Social Security and Medicare taxes. F-1 students on optional practical training (OPT), J-1 exchange visitors, and certain other nonimmigrant visa holders may not have FICA withheld, depending on their specific status and the rules in effect. Your employer should know whether you are exempt based on your visa category.

If you are not a U.S. citizen and you leave the country, you may be able to claim a refund of Social Security and Medicare taxes you paid if you did not work long enough to become vested in the system. The rules vary by country and visa status, so check with a tax professional if this applies to you.

Why FICA appears on your pay stub even if you do not plan to use Social Security

You cannot opt out of FICA withholding. Even if you plan to retire early, move out of the country, or do not believe you will need Social Security, the tax is mandatory for all workers covered by the law. The only exceptions are certain government employees hired before specific dates, some religious groups that have received exemptions, and the visa categories mentioned above.

The reason is that FICA funds not just retirement benefits but also disability and survivor benefits. If you become disabled before retirement age, you and your family may receive benefits. If you die, your spouse and children may receive survivor benefits. These are insurance functions, not just retirement savings, which is why participation is required.

Frequently Asked Questions

Can I get my FICA taxes back if I did not work long enough to receive Social Security?

If you are not a U.S. citizen and you leave the country, you may be able to claim a refund of Social Security taxes (but not Medicare taxes) if you did not work the required 40 quarters. U.S. citizens cannot claim a refund. If you die before claiming benefits, your estate cannot recover the money, but your survivors may receive benefits based on your work record.

Why do I pay FICA taxes if I am already retired and receiving Social Security?

If you work after you start receiving Social Security, you still pay FICA taxes on that income. However, if your earnings exceed a certain amount before you reach full retirement age, your Social Security benefit is temporarily reduced. Once you reach full retirement age, there is no earnings limit and you receive your full benefit plus your wages.

What is the wage cap for Social Security, and why does it exist?

The Social Security wage cap (also called the contribution and benefit base) is the maximum amount of income subject to Social Security tax each year. In 2024 it is $168,600; in 2025 it is $176,100. It exists because Social Security benefits are capped at a maximum amount, so there is no need to collect tax on income above a certain level. The cap adjusts each year based on wage growth.

Do I pay FICA taxes on tips, bonuses, and other forms of income?

Yes. FICA taxes explore to wages, tips, bonuses, and most other compensation you receive for work. Tips must be reported to your employer, and FICA is withheld on them. If you receive a large bonus, FICA is withheld on that too. The only common income that is not subject to FICA is investment income like dividends and capital gains.

If I work for two employers, do I pay FICA twice?

Yes, you pay FICA to each employer based on what you earn at that job. However, the Social Security portion is capped per year, so if you overpay across both jobs, you can claim a refund when you file your tax return. Medicare tax has no cap, so you pay 1.45 percent on all income from both jobs, plus the additional 0.9 percent if your total income exceeds the threshold.