Payroll Taxes: FICA, Social Security & Medicare

FICA stands for the Federal Insurance Contributions Act. Every paycheck from a W-2 job includes two FICA taxes: Social Security (officially OASDI) and Medicare. Both the employee and the employer pay half, so the combined rate on each dollar of wages is 15.3%.

Employee Social Security tax

Employees pay 6.2% of gross wages into Social Security, up to the annual taxable wage base (which adjusts annually — in 2026 it is $176,100). Once your wages exceed that cap, no more Social Security tax is owed for the year. High earners effectively pay a lower effective Social Security rate because of the cap.

Employee Medicare tax

Employees pay 1.45% of gross wages for Medicare, with no cap. High earners pay an additional 0.9% on wages above $200,000 ($250,000 for married filing jointly) — this Additional Medicare Tax is withheld by the employer on the employee side only; the employer does not match it.

Self-employed workers pay both sides

If you are self-employed, you pay the full 15.3% (12.4% Social Security + 2.9% Medicare) on net self-employment income as the SE tax. You can deduct half of SE tax from your federal income tax.

Employer FICA obligations

Employers match the employee 6.2% Social Security and 1.45% Medicare contributions, depositing the combined 15.3% (on the employee's wages) to the IRS. Failing to withhold or remit these taxes triggers Trust Fund Recovery Penalties, one of the more serious small-business liabilities.