What Is FICA Tax?
FICA (Federal Insurance Contributions Act) tax is the US payroll tax that funds Social Security and Medicare. Employees pay 6.2% for Social Security, up to an annual wage limit, plus 1.45% for Medicare, for a combined 7.65%. Employers pay a matching amount.
The Two Parts of FICA
Social Security tax (6.2%) applies only up to the annual wage base, which is adjusted each year. Medicare tax (1.45%) applies to all wages, and an additional 0.9% Medicare tax applies to wages above certain income thresholds.
FICA vs. Self-Employment Tax
Self-employed people pay both the employee and employer shares, a combined 15.3%, through self-employment tax.
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🔗 Related Terms
More Taxes Terms
- Additional Medicare Tax
- Adjusted Gross Income (AGI)
- Alternative Minimum Tax (AMT)
- Capital Gains Tax
- Capital Loss
- Child Tax Credit
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Last updated: September 27, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.