FICA tax is the Social Security and Medicare tax withheld from your paycheck

FICA stands for Federal Insurance Contributions Act. It is a federal payroll tax that funds two programs: Social Security (retirement, disability, and survivor benefits) and Medicare (health insurance for people 65 and older, and some younger people with disabilities). When you work, your employer withholds FICA tax from your paycheck and sends it to the federal government.

You will see FICA broken into two line items on your pay stub: Social Security tax and Medicare tax. Both are mandatory if you are a W-2 employee. Self-employed people pay both portions themselves, though they get a deduction for half of what they pay.

Key Takeaways

  • FICA tax funds Social Security and Medicare, and your employer withholds it automatically from your paycheck.
  • Social Security tax is 6.2% of your wages up to a yearly cap (the cap changes each year), and Medicare tax is 1.45% with no cap.
  • Your employer matches the amount you pay, so the total FICA contribution is double what appears on your pay stub.
  • Self-employed workers pay both the employee and employer portions themselves, totaling 15.3% for Social Security and Medicare combined.
  • FICA taxes are separate from federal income tax withholding and are not based on how many dependents you claim.

How much FICA tax comes out of your paycheck

Social Security tax is 6.2% of your gross wages, but only up to a yearly earnings cap. For 2024, that cap is $168,600. Once you earn more than that in a calendar year, Social Security tax stops being withheld from your paychecks for the rest of the year. This cap changes annually.

Medicare tax is 1.45% of your gross wages with no earnings cap—it applies to every dollar you make. If you earn over $200,000 as a single filer (or $250,000 if married filing jointly), an additional 0.9% Medicare tax applies to income above those thresholds.

Your employer matches both amounts. So while you see 6.2% and 1.45% withheld from your check, your employer pays an equal amount on your behalf. You do not see that employer contribution on your pay stub, but it counts toward your Social Security and Medicare records.

The difference between FICA and federal income tax

FICA and federal income tax are two separate withholdings. Federal income tax is based on your W-4 form—the number of dependents you claim and your filing status. FICA tax is fixed by law and does not change based on your W-4.

Federal income tax goes into the general U.S. Treasury and funds government operations. FICA tax is earmarked specifically for Social Security and Medicare. When you file your tax return, federal income tax withholding is reconciled against your actual tax liability. FICA tax is not reconciled—what you pay in is what you pay in, and it is credited to your Social Security account.

How FICA tax builds your Social Security record

Every dollar of FICA tax you pay is credited to your Social Security account. The Social Security Administration tracks your earnings history and uses it to calculate your retirement benefit when you reach full retirement age, which ranges from 66 to 67 depending on your birth year.

You need 40 credits (also called quarters) to be may be able to access for Social Security retirement benefits. You earn one credit for each $1,730 of wages in 2024 (the amount changes yearly). Most people earn four credits per year if they work full-time, so you typically need about 10 years of work history to may have access to.

If you become disabled or die, your family may be able to receive benefits based on your earnings record even if you have not reached retirement age. The amount depends on how much you have earned and paid into the system.

What happens if you are self-employed

Self-employed workers pay FICA tax through self-employment tax, reported on Schedule SE of your tax return. You pay both the employee portion (6.2% for Social Security, 1.45% for Medicare) and the employer portion (another 6.2% and 1.45%), for a total of 15.3% on net self-employment income.

You can deduct half of your self-employment tax when you calculate your adjusted gross income, which reduces your federal income tax. You still owe the full amount to Social Security and Medicare, but the deduction lowers your overall tax bill.

Self-employed people must pay self-employment tax if they have net earnings of $400 or more in a year. You pay it when you file your annual tax return, though you may need to make quarterly estimated tax payments if you expect to owe $1,000 or more.

FICA tax for non-citizens and visa holders

Most people working in the United States on a visa—including H-1B, L-1, and other employment visas—must pay FICA tax on their U.S. wages. The tax is withheld the same way as for citizens and permanent residents.

Some visa categories, such as F-1 students on optional practical training (OPT) or J-1 exchange visitors, may be exempt from Social Security and Medicare tax under certain conditions. Your employer's payroll department should know your visa status and withhold correctly. If you believe you are being withheld incorrectly, contact your employer's HR or payroll office.

What to do if FICA tax is withheld incorrectly

Check your pay stub each pay period to make sure FICA tax is being withheld at the correct rates. If you notice an error—such as FICA tax still being withheld after you have exceeded the Social Security earnings cap, or incorrect withholding for your visa status—tell your employer's payroll department when ready.

Keep records of your pay stubs. When you file your tax return, the amounts your employer reports on your W-2 form should match what you see on your stubs. If there is a discrepancy, you can contact the IRS or the Social Security Administration to investigate.

If you overpaid Social Security tax because you worked for multiple employers in the same year, you can claim a credit on your tax return. You cannot recover overpaid Medicare tax unless there was a calculation error.

Frequently Asked Questions

Why do I have to pay FICA tax if I might not collect Social Security?

FICA tax funds not just retirement benefits but also disability and survivor benefits. If you become unable to work or die, your family may receive benefits based on your earnings record. Additionally, FICA tax for Medicare helps fund health coverage for older adults and some younger people with disabilities, regardless of whether you personally collect Social Security.

Can I opt out of paying FICA tax?

No. FICA tax is mandatory for all W-2 employees and self-employed workers. Some religious groups may request an exemption from self-employment tax, but this is rare and requires IRS approval. Regular employees cannot opt out.

What happens to FICA tax if I change jobs?

FICA tax continues to be withheld from each paycheck at each job. If you work for multiple employers in the same year and exceed the Social Security earnings cap, you may overpay Social Security tax. You can claim a credit for the overpayment when you file your tax return.

Does FICA tax count toward my federal income tax?

No. FICA tax and federal income tax are separate. FICA tax does not reduce the amount of federal income tax you owe. Both are withheld from your paycheck, but they fund different programs and are calculated independently.

What if my employer does not withhold FICA tax?

Contact your employer's payroll department when ready. Employers are required by law to withhold and pay FICA tax. If your employer refuses or fails to do so, you can file a complaint with the Department of Labor or contact the IRS. You may also want to consult a tax professional or employment attorney.