FICA tax is split between you and your employer, or paid entirely by you if you're self-employed

FICA stands for Federal Insurance Contributions Act. It funds Social Security and Medicare. If you work for an employer, you and your employer each pay a portion—you see yours deducted from your paycheck, and your employer sends theirs to the IRS separately. If you're self-employed, you pay both portions yourself, which is called self-employment tax.

The split is straightforward on a W-2 job: you pay 7.65% of your wages, your employer pays 7.65%. That 7.65% breaks down into 6.2% for Social Security and 1.45% for Medicare. 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—you pay this extra amount, not your employer.

For self-employed people—freelancers, contractors, small business owners—the math is different. You pay both the employee and employer portions, totaling 15.3%. The IRS lets you deduct half of what you pay as a business expense, which reduces your taxable income slightly, but you still owe the full amount.

Key Takeaways

  • Employees pay 7.65% of wages to FICA; employers pay an equal 7.65% on your behalf.
  • The 7.65% employee portion breaks into 6.2% for Social Security and 1.45% for Medicare.
  • Self-employed workers pay 15.3% total (both employee and employer portions) on net earnings from self-employment.
  • Income above $200,000 (single) or $250,000 (married filing jointly) is subject to an additional 0.9% Medicare tax on the employee side only.
  • Your FICA payments fund your future Social Security benefits and Medicare coverage, not general government spending.

How FICA works for W-2 employees

When you receive a paycheck, your employer withholds FICA tax before you see the money. This withholding appears on your pay stub as "Social Security" and "Medicare." Your employer then sends both your portion and theirs to the IRS on a quarterly schedule. You don't write a separate check—it happens automatically.

Your employer is legally required to match your contribution. This is a real cost to the business, though it doesn't come out of your pocket. When you see job postings or salary discussions, the salary quoted is usually before FICA withholding, so your take-home will be lower.

The Social Security portion (6.2%) only applies to the first $168,600 of your income in 2024. Once you earn above that amount in a calendar year, no more Social Security tax is withheld from additional earnings. Medicare tax (1.45%) has no income cap—it applies to all wages. If you work for multiple employers in the same year, each one withholds based on what you earn from them, so you could temporarily overpay if your combined income crosses the threshold; you'd get the overage back when you file your tax return.

How FICA works for self-employed people

Self-employed workers file Schedule SE (Self-Employment Tax) with their tax return. You calculate your net earnings from self-employment (business income minus business expenses), then explore the 15.3% rate to that figure. Unlike W-2 employees, you don't have an employer to match your contribution—you pay the full amount yourself.

The IRS allows you to deduct half of your self-employment tax as a business expense on your income tax return, which lowers your overall tax bill slightly. However, you still owe the full 15.3% to Social Security and Medicare. Self-employed people typically pay this through quarterly estimated tax payments rather than having it withheld from paychecks.

The Social Security wage base limit ($168,600 in 2024) also applies to self-employed income. Once your net self-employment earnings reach that amount, the 6.2% Social Security portion stops, but the 1.45% Medicare portion continues on all remaining earnings. The additional 0.9% Medicare tax on high earners applies to self-employed people the same way it does to employees.

The difference between FICA and income tax

FICA and federal income tax are separate. FICA funds Social Security and Medicare specifically. Income tax funds general government operations. Your paycheck shows both withheld separately, and they're reported to the IRS on different forms. You can owe income tax while owing no FICA, or vice versa, depending on your income level and situation.

FICA is a fixed percentage with a wage cap (for Social Security). Income tax uses a progressive bracket system—the more you earn, the higher your tax rate. A person earning $50,000 pays the same FICA rate as someone earning $500,000 (though the high earner pays the additional Medicare tax). But they pay different income tax rates because income tax brackets change based on total earnings.

What happens if you don't pay FICA

If you're a W-2 employee, you can't avoid FICA withholding—your employer is required by law to deduct it. If you're self-employed and don't pay self-employment tax, the IRS will assess penalties and interest. More importantly, unpaid FICA contributions don't count toward your Social Security record, which means lower benefits later or no benefits at all if you don't have enough quarters of coverage.

Employers who fail to withhold or remit FICA face serious penalties, including criminal charges in cases of willful evasion. This is one reason payroll fraud is taken very seriously. If you suspect your employer isn't withholding FICA correctly, you can report it to the IRS using Form 13909.

FICA and your Social Security record

Every dollar you pay in FICA tax is recorded under your Social Security number. The Social Security Administration tracks your earnings history and uses it to calculate your future benefits. You need 40 quarters of coverage (roughly 10 years of work) to be may be able to access for retirement benefits. Each quarter you earn at least $1,680 (in 2024) counts as one quarter of coverage, regardless of how much more you earn that quarter.

You can view your earnings record and estimated benefits online at ssa.gov using your personal account. It's worth checking periodically to make sure your employer reported your earnings correctly. If there's an error, you can request a correction, though you generally have a limited time window to do so.

FICA for household workers and contractors

If you hire a housekeeper, nanny, or other household worker, you may be required to pay FICA taxes on their wages. The threshold varies by year; in 2024, you owe FICA if you pay a household worker $2,700 or more in a calendar year. You'd withhold their portion and send both portions to the IRS.

Independent contractors are different. If you hire a contractor (plumber, electrician, consultant), you don't withhold or pay FICA on their behalf. They're responsible for their own self-employment tax. You report what you paid them on Form 1099-NEC, and they report it on their tax return.

Frequently Asked Questions

Can I opt out of paying FICA tax?

No. If you're a W-2 employee, FICA withholding is mandatory. If you're self-employed, you must pay self-employment tax on net earnings above $400. The only exception is certain religious groups with IRS approval, which is rare and requires a formal exemption process.

What if I work part-time or have multiple jobs?

Each employer withholds FICA based on what you earn from them. If your combined earnings exceed the Social Security wage base ($168,600 in 2024), you may overpay Social Security tax. When you file your return, you can claim a credit for the overpayment, and the IRS will refund it.

Do FICA taxes go into a personal account with my name on it?

No. FICA taxes go into the Social Security and Medicare trust funds, which are used to pay current beneficiaries. Your earnings record is tracked, and your future benefits are calculated based on what you paid in, but there's no separate account holding your specific contributions.

What if I'm not a U.S. citizen or don't have a Social Security number?

If you work legally in the U.S., you need a Social Security number or ITIN (Individual Taxpayer Identification Number) to have FICA withheld. Your employer is required to verify your work authorization. If you're undocumented, you cannot legally work, and employers who hire you are breaking the law.

Do I pay FICA on tips?

Yes. Tips are considered wages and are subject to FICA withholding. If you work in a tipped position, your employer should withhold FICA on both your base wage and reported tips. If tips aren't reported to your employer, you're still required to report them on your tax return and pay FICA on them.