Social Security and Medicare taxes explained — what they fund, how they’re calculated, and what the self-employed pay.
FICA stands for the Federal Insurance Contributions Act, the 1935 law that created mandatory payroll contributions for Social Security and Medicare. Every American worker who earns wages pays FICA — it is withheld automatically from every paycheck, separate from federal income tax and regardless of what you put on your W-4.
Your employer pays an identical 7.65% on top of your wages, meaning the total contribution toward your Social Security and Medicare is 15.3% of your gross pay — you pay half, your employer pays half. On a $60,000 salary, your 7.65% share is $4,590 per year, and your employer contributes another $4,590 on your behalf.
The Social Security portion of FICA is 6.2% of your gross wages, up to the annual wage base. For 2026, that wage base is $184,500. Once your earnings cross $184,500 for the year, Social Security withholding stops completely on subsequent paychecks — your year-to-date column on your pay stub will show the maximum of $11,439 (6.2% × $184,500) and no further withholding will occur.
The wage base adjusts each year based on the national average wage index. It has risen from $137,700 in 2020 to $184,500 in 2026. For most workers earning below this threshold, Social Security is simply 6.2% of every dollar earned with no variation.
The Social Security program (officially called OASDI — Old Age, Survivors, and Disability Insurance) pays for:
Your eventual Social Security benefit is calculated from your 35 highest-earning years. Higher lifetime earnings mean a higher benefit, up to a maximum monthly amount.
The Medicare portion of FICA is 1.45% of all wages with no cap. Unlike Social Security, it applies to every dollar you earn — there is no wage base, and Medicare withholding never stops. On the same $60,000 salary, Medicare withholding is $870 for the year.
High earners face an additional layer: the Additional Medicare Tax of 0.9% applies to wages above $200,000 for single filers ($250,000 for married filing jointly). Your employer automatically begins withholding this 0.9% once your wages from that employer exceed $200,000 in a calendar year. Unlike the base Medicare tax, the employer does not match this 0.9% — it is paid entirely by the employee.
If you have multiple jobs and your combined wages exceed $200,000 but no single employer pays you more than that, you may owe the Additional Medicare Tax when you file your return, since each employer withholds independently. You can address this proactively by adding extra withholding in Step 4(c) of your W-4.
Medicare taxes fund Medicare Part A, which covers inpatient hospital care, skilled nursing facility care, hospice, and some home health services for people 65 and older (and for younger people with qualifying disabilities). Parts B, C, and D are funded separately through premiums.
Because Social Security has a wage base cap and Medicare does not, the effective FICA rate as a percentage of gross wages changes at the $184,500 threshold:
| Annual Salary | Social Security | Medicare | Total FICA | Effective FICA Rate |
|---|---|---|---|---|
| $40,000 | $2,480 | $580 | $3,060 | 7.65% |
| $60,000 | $3,720 | $870 | $4,590 | 7.65% |
| $80,000 | $4,960 | $1,160 | $6,120 | 7.65% |
| $100,000 | $6,200 | $1,450 | $7,650 | 7.65% |
| $150,000 | $9,300 | $2,175 | $11,475 | 7.65% |
| $184,500 | $11,439 | $2,675 | $14,114 | 7.65% (SS cap hit) |
| $200,000 | $11,439 | $2,900 | $14,339 | 7.17% |
| $250,000 | $11,439 | $4,300* | $15,739* | 6.30%* |
*$250,000 includes 0.9% Additional Medicare Tax on $50,000 above the $200,000 threshold ($450), making Medicare $3,625 + $450 = $4,075. Effective rate includes Additional Medicare Tax.
The table illustrates why high earners have a lower effective FICA rate: once Social Security stops at $184,500, only the 1.45% Medicare continues. A worker earning $250,000 pays the same $11,439 in Social Security as a worker earning $184,500.
Self-employed individuals — freelancers, independent contractors, sole proprietors — do not have an employer to pay the other 7.65%. Instead, they pay self-employment (SE) tax at the full 15.3% rate, covering both sides of the FICA contribution.
The calculation has one wrinkle: SE tax is assessed on 92.35% of net self-employment income (not 100%), because employees only pay FICA on their wages, not on the employer’s matching contribution. This mirrors the employee experience where the employer’s 7.65% is paid on top of the wage, not out of it.
As a partial offset, self-employed workers can deduct 50% of SE tax from their gross income on Form 1040 (Schedule SE), reducing their taxable income. This does not appear on a W-2 but can meaningfully lower the income tax bill.
Self-employed workers must pay SE tax quarterly via estimated tax payments rather than through payroll withholding. Underpaying can result in an underpayment penalty.
Most workers in the US pay FICA without exception. A small number of workers are legally exempt:
If you believe you are exempt and FICA is being withheld, speak with your payroll department. Most workers cannot opt out of FICA and should not attempt to claim exemption without a qualifying legal basis.
Enter your salary to see Social Security and Medicare broken out alongside federal tax, state tax, and take-home pay.
Calculate My Take-Home Pay →FICA (Federal Insurance Contributions Act) is the payroll tax that funds Social Security and Medicare. Employees pay 6.2% for Social Security (on wages up to $184,500 in 2026) and 1.45% for Medicare (on all wages) — 7.65% total. Employers pay a matching 7.65%, making the combined contribution 15.3% of gross wages.
The employee FICA rate is 7.65%: 6.2% Social Security on the first $184,500 of wages, and 1.45% Medicare on all wages. Workers earning above $200,000 (single filer) also pay an additional 0.9% Additional Medicare Tax on wages above that threshold.
OASDI stands for Old Age, Survivors, and Disability Insurance — the formal name for the Social Security program. When you see OASDI on your pay stub, it refers to the Social Security tax line: 6.2% of gross wages up to $184,500 for 2026.
The Social Security wage base ($184,500 in 2026) is the maximum annual wages subject to the 6.2% Social Security tax. Once your year-to-date earnings reach that amount, Social Security withholding stops for the rest of the year. Medicare has no wage base — 1.45% applies to every dollar earned.
Self-employed workers pay self-employment (SE) tax at 15.3% — the full combined employee and employer share. It is calculated on 92.35% of net self-employment income. Half of SE tax (7.65%) is deductible from gross income on Form 1040, partially offsetting the additional burden compared to employees.
Almost no W-2 employees can avoid FICA. It is withheld automatically regardless of W-4 elections. A narrow set of workers are exempt: some state/local government employees in alternative pension systems, certain nonresident alien students, and student workers at their own school under specific IRS rules.
Social Security funds retirement benefits, disability benefits (SSDI), and survivors benefits for workers and their families. Medicare funds Medicare Part A — hospital stays, skilled nursing care, and hospice for people 65 and older or with qualifying disabilities.
An extra 0.9% on wages above $200,000 for single filers ($250,000 for married filing jointly), created by the Affordable Care Act. Your employer withholds it automatically once your wages from that job exceed $200,000. Unlike the base Medicare tax, your employer does not match this 0.9%.