What is FICA Tax?
The US payroll tax for Social Security and Medicare - paid half by the employee, half by the employer.
FICA Tax: definition
FICA has two parts. Social Security tax is 6.2% each from employee and employer (12.4% combined) up to an annual wage base limit that rises yearly. Medicare tax is 1.45% each (2.9% combined) with no wage cap, plus an Additional Medicare Tax of 0.9% on high earners (employee-only, above a threshold). Self-employed people pay both halves as self-employment tax. FICA is separate from income tax withholding.
| Component | Employee | Employer | Wage cap |
|---|---|---|---|
| Social Security | 6.2% | 6.2% | Up to annual wage base |
| Medicare | 1.45% | 1.45% | No cap |
| Additional Medicare | 0.9% | - | Above high-earner threshold |
How Fintra handles it
Fintra payroll withholds the employee FICA share, calculates the matching employer share, and stops Social Security at the wage base while continuing Medicare on all wages - including the Additional Medicare Tax above the threshold. Both the withheld and employer portions post to the ledger as liabilities until remitted, keeping payroll and the books in sync.
- Employee FICA withheld and employer match computed each run
- Social Security capped at the wage base; Medicare uncapped
- Additional Medicare Tax applied above the high-earner threshold
Worked example
Frequently asked questions
What does FICA tax pay for?
FICA funds two federal programs: Social Security (retirement, disability, and survivor benefits) and Medicare (health coverage for people 65 and older and certain others). The tax is earmarked for these programs rather than general government spending.
How much is FICA tax?
The employee pays 6.2% for Social Security (up to the annual wage base) and 1.45% for Medicare (on all wages), totaling 7.65%. The employer matches this. High earners pay an extra 0.9% Additional Medicare Tax above a threshold, which the employer does not match.
Is FICA the same as income tax?
No. FICA is a fixed-rate payroll tax funding Social Security and Medicare, split with the employer. Income tax withholding is separate, based on the W-4 and tax tables, and funds general government. Both are deducted from paychecks but calculated independently.
Do employers pay FICA too?
Yes - employers match the employee Social Security and Medicare contributions dollar for dollar (except the Additional Medicare Tax). This employer share is a real cost of employment, which Fintra tracks and posts to the ledger alongside the withheld employee portion.
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