FICA taxes are split between you and your employer, with each paying the same rate
FICA stands for Federal Insurance Contributions Act. It funds Social Security and Medicare. If you work as an employee, you and your employer each pay 7.65% of your wages — you see this deducted from your paycheck, and your employer sends in a matching amount. If you work for yourself, you pay both halves yourself, which comes to 15.3%.
The 7.65% breaks into two parts: 6.2% for Social Security and 1.45% for Medicare. There is also an additional 0.9% Medicare tax that applies only to wages above a certain threshold — $200,000 for single filers, $250,000 for married couples filing jointly. This extra 0.9% comes entirely from your paycheck; your employer does not match it.
FICA taxes are mandatory for almost all workers. The main exceptions are certain religious groups, some government employees hired before 1984, and nonresident aliens on student or work visas. If you are unsure whether you owe FICA, your employer or a tax preparer can tell you based on your visa status or employment type.
Key Takeaways
- Employees pay 7.65% of gross wages in FICA taxes, and employers pay an equal 7.65% on top of that.
- Self-employed people pay the full 15.3% themselves because they are both employee and employer.
- FICA taxes fund Social Security retirement benefits and Medicare health insurance for people 65 and older.
- An additional 0.9% Medicare tax applies to wages over $200,000 (single) or $250,000 (married filing jointly), and only the employee pays this extra amount.
- Your employer withholds your FICA taxes from each paycheck and sends them to the IRS along with their matching contribution.
How FICA taxes are withheld from your paycheck
Your employer calculates FICA taxes on your gross pay — that is, your wages before any deductions. They withhold 7.65% and send it to the IRS, along with their own 7.65% contribution. This happens with every paycheck. You will see the breakdown on your pay stub as "Social Security" (6.2%) and "Medicare" (1.45%), plus the additional Medicare tax (0.9%) if your year-to-date wages exceed the threshold.
The withholding is automatic and mandatory. You cannot opt out of FICA taxes the way you might adjust your federal income tax withholding. However, if you earn over the Social Security wage base — $168,600 in 2024, though this amount changes yearly — you stop paying the 6.2% Social Security portion once you hit that cap. The 1.45% Medicare tax has no cap and continues on all wages.
If you work for multiple employers in the same year, each one withholds Social Security tax up to the wage base. This can result in overpayment if your combined wages exceed the cap. You can recover the overpayment when you file your tax return.
What self-employed people pay
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 FICA, totaling 15.3%. This is called self-employment tax. You calculate it on your net business income (income minus business expenses) using Schedule SE, which you file with your tax return.
Self-employed people can deduct half of their self-employment tax when calculating their adjusted gross income, which provides some tax relief. However, you still owe the full 15.3% amount. You typically pay this through quarterly estimated tax payments to the IRS, rather than having it withheld from a paycheck.
If you are both self-employed and work as an employee for someone else, you pay FICA on both types of income. The self-employment tax applies to your business net income, and your employer withholds FICA on your wages. Again, if your combined income exceeds the Social Security wage base, you may overpay Social Security tax and can recover it on your return.
Who does not pay FICA taxes
Most workers pay FICA taxes, but a few groups are exempt. Members of certain religious organizations — primarily the Amish and Mennonite communities — can request exemption if their faith prohibits insurance and they have never received Social Security or Medicare benefits. They must file Form 4029 with the IRS.
Some federal employees hired before 1984 are covered under the Civil Service Retirement System instead of Social Security and do not pay the Social Security portion of FICA. However, they still pay Medicare tax. Nonresident aliens on certain visas — such as F-1 student visas or J-1 exchange visitor visas — are generally exempt from Social Security tax but must pay Medicare tax.
Household employees and farm workers have different rules depending on how much they earn. A household employee earning less than $2,700 in 2024 from one employer does not trigger FICA withholding, though the employer can still choose to withhold. Farm workers have a separate threshold. Check with your employer or a tax preparer if you fall into one of these categories.
Where FICA taxes go
The 6.2% Social Security portion funds retirement, disability, and survivor benefits. When you reach full retirement age — currently between 66 and 67 depending on your birth year — you become may be able to access to receive monthly Social Security payments based on your earnings history. If you become disabled before retirement age, you may receive disability benefits. If you die, your family members may receive survivor benefits.
The 1.45% Medicare portion funds health insurance for people 65 and older. It covers hospital stays, doctor visits, and some preventive care. The additional 0.9% Medicare tax that applies to higher earners also goes into the Medicare trust fund.
FICA taxes are separate from federal income tax. You pay both. The money you contribute to Social Security and Medicare is not held in an individual account with your name on it — it goes into a general trust fund that pays current beneficiaries. Your future benefits are based on your earnings record and how long you contributed, not on how much you personally paid in.
FICA taxes versus income tax withholding
FICA and federal income tax are two different things, and they appear separately on your pay stub. FICA is a fixed percentage (7.65% for employees, with the additional 0.9% Medicare tax for high earners). Federal income tax withholding varies based on the information you provide on Form W-4 — your filing status, number of dependents, and other income.
You can adjust your federal income tax withholding by submitting a new W-4 to your employer, but you cannot change your FICA withholding. Some people confuse the two and think they can reduce FICA taxes by changing their W-4. That only affects income tax, not FICA.
State and local income taxes are separate again and vary by location. Some states have no income tax at all. Your employer withholds these based on where you work and where you live, following state and local rules.
What happens if you do not pay FICA taxes
If you are an employee, you have no choice — your employer withholds FICA automatically. If you are self-employed and do not pay self-employment tax, the IRS will assess penalties and interest on the unpaid amount. You also will not receive Social Security and Medicare credit for that year of earnings, which can reduce your future benefits.
If you believe you were incorrectly classified as an independent contractor when you should have been an employee, you can file Form SS-8 with the IRS to request a information of worker status. If the IRS agrees you are an employee, your employer becomes responsible for paying back FICA taxes owed.
Frequently Asked Questions
Can I get a refund of FICA taxes I paid?
You cannot get a refund of FICA taxes you correctly owed. However, if you overpaid Social Security tax because you worked for multiple employers and your combined wages exceeded the wage base, you can claim the overpayment as a credit on your tax return. Medicare tax has no wage base, so overpayment there is rare.
Do FICA taxes count toward my income tax refund or owed amount?
No. FICA and federal income tax are separate. Your FICA withholding does not affect whether you owe income tax or receive a refund. They are calculated independently, and both appear on your tax return.
What if my employer did not withhold FICA taxes?
Contact your employer when ready and ask them to correct the withholding. If they refuse or go out of business, you may owe the taxes yourself when you file your return. You can also file a complaint with the Department of Labor or contact the IRS for guidance on your specific situation.
Do I pay FICA taxes on tips?
Yes. Tips are considered wages and are subject to FICA taxes. Your employer should withhold FICA on tips you report to them. If you receive cash tips you do not report, you are still legally required to pay FICA on them when you file your tax return.
How much will I receive in Social Security benefits based on what I paid in FICA?
Your Social Security benefit amount depends on your earnings history, how many years you worked, and the age at which you claim benefits — not straightforward on how much FICA tax you paid. The Social Security Administration maintains a record of your earnings and can provide an estimate of your future benefits through their website or by request.