FICA is one of those acronyms that shows up the moment you start running payroll, and understanding it is non-negotiable if you have employees. Even if you use payroll software to automatically calculate and remit your taxes, knowing the rules gives you peace of mind as an employer. If you’ve ever wondered what FICA stands for, what you’re responsible for as an employer, or how to get FICA withholding right, you’re in the right place.
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FICA fast facts
- FICA includes three components: Social Security Tax, Medicare Tax, and the Additional Medicare Tax.
- Employers must deposit withheld FICA taxes and their own matching contributions on a monthly or semi-weekly schedule, and report them quarterly on Form 941.
- Self-employed individuals pay both the employee and employer portions of FICA under SECA, totaling 12.4% for Social Security Tax and 2.9% for Medicare Tax.
- FICA contributions fund Social Security and Medicare programs, which provide retirement income, disability benefits, and healthcare coverage for eligible Americans.
We’ll break down each component of the FICA tax, walk through current 2026 rates, and cover what self-employed individuals need to know as well.
What counts as FICA tax?
All three components above (Social Security Tax, Medicare Tax, and the Additional Medicare Tax) make up FICA. By paying them, employers and employees contribute to programs that provide retirement income, disability benefits, and healthcare coverage for eligible Americans.
| Tax component | 2026 employee rate | 2026 employer rate | Self-employed (SECA) rate | 2026 wage base limit |
| Social Security | 6.2% | 6.2% | 12.4% | $184,500 |
| Medicare | 1.45% | 1.45% | 2.9% | No limit |
| Additional Medicare | 0.9% | N/A | 0.9% | Triggers at $200,000 (Single) |
Is FICA different than income tax?
Yes. “FICA taxes and income taxes are two different things, although they do go hand in hand,” explains David Kindness, a CPA with over ten years of industry experience. “Income tax is just that: a tax on your income. Income taxes are levied by federal and state governments (except for a handful of states), and they are calculated as a percentage of your income.”
Income taxes are also progressive. “If you make more money, you pay more in income taxes,” he says. “And they’re used to fund the US government’s operations in all kinds of ways.”
The federal government earmarks FICA taxes, on the other hand, specifically for Social Security and Medicare.
“Unlike income taxes, FICA is a flat tax, meaning the tax rate does not change when income levels change: everyone pays the same percentages. Also, whereas income and medicare taxes have no income limit, Social Security taxes are not imposed after a certain income level.”
— David Kindness, CPA
Are FICA taxes mandatory?
Yes. FICA applies to ordinary earned income, not investment or passive income. Both employees and employers (and self-employed people) pay FICA. Employees pay half of FICA taxes and their employers pay the other half. But self-employed individuals pay the full amount, although they can deduct part of that expense on their tax returns
Next, let’s get familiar with the specifics that make up the FICA tax.
Further reading
Want to go deeper? Our guide to the Social Security wage base covers how the SSA sets the limit and how it changes each year.
Medicare Tax
The second component of FICA is the Medicare Tax. Employers must withhold 1.45% of each employee’s taxable wages to cover it. Unlike Social Security Tax, there’s no wage base limit. The Medicare Tax applies to all taxable wages regardless of the amount.
Higher wage earners who reach a certain income threshold also owe an Additional Medicare Tax of 0.9% on every dollar earned above that amount. The threshold varies by filing status.
For example, the threshold for individual filers is $200,000. An employee who files taxes as single and earns $300,000 in the 2026 tax year would owe a total of $5,250 in Medicare taxes.
Here’s how we calculate that:
Medicare Tax: $300,000 x 1.45% = $4,350
Additional Medicare Tax: $300,000 – $200,000 = $100,000 x 0.9% = $900
Total Medicare Tax: $4,350 + $900 = $5,250
Employers use the $200,000 threshold when withholding Additional Medicare Tax, regardless of an employee’s filing status. You can find more details about threshold amounts for each filing status at IRS.gov.
Just like Social Security Tax, employers must match each employee’s Medicare Tax contribution dollar-for-dollar. However, the Additional Medicare Tax is the employee’s responsibility. There’s no employer match.
What should you do when an employee exceeds one or both FICA thresholds?
Social Security Tax stops at the wage base limit, and the Additional Medicare Tax kicks in above $200,000. But what happens when a hire has already crossed one or both of those thresholds with a previous employer?
The IRS is clear on this. Employers calculate FICA based on wages they pay the employee, not what a prior employer paid. That means you withhold Social Security Tax from the first dollar you pay a highly compensated new hire, and the Additional Medicare Tax won’t apply until you pay them more than $200,000.
If that results in over-withholding on Social Security Tax or under-withholding on Additional Medicare Tax, the employee sorts it out when they file their federal income tax return. They claim a refund or pay the balance owed at that time.
Paying the IRS
Once you withhold FICA taxes from your employees’ paychecks and set aside your matching contributions, it’s time to send that money to the IRS. The timing is important.
The IRS requires most employers to deposit FICA taxes either monthly or semi-weekly, depending on their total tax liability during a lookback period. This is separate from filing Form 941, the quarterly return where you report wages paid, taxes withheld, and employer contributions. Deposits go to the IRS via the Electronic Federal Tax Payment System (EFTPS). You file Form 941 once per quarter. It’s due one month after the quarter ends. For example, the return for the quarter ending March 31 is due April 30.
Very small employers with an annual employment tax liability of $1,000 or less may qualify to file Form 944 annually, with different deposit rules. But for most businesses, monthly or semi-weekly deposits apply.
Missing a deposit deadline triggers penalties, so be sure to confirm your deposit schedule with your payroll provider or tax advisor if you’re not sure. And since FICA wages also appear on W-2s at year-end, make sure those deadlines don’t slip either.
After you find out more about FICA
Payroll comes with a lot of terminology. If you want a handy reference, our payroll terms glossary covers the vocabulary you encounter as a small business owner.
SECA: FICA for the self-employed
If you’re self-employed, you don’t split FICA with an employer. You cover both sides yourself. Under the Self-Employed Contributions Act (SECA), that means paying 12.4% for Social Security Tax and 2.9% for Medicare Tax on your net self-employment income. High earners also owe the 0.9% Additional Medicare Tax above their applicable threshold.
The wage base limit still applies to Social Security. It’s capped once your earnings exceed $184,500 in 2026. And you can deduct the employer-equivalent portion of your self-employment tax when calculating your adjusted gross income.
To report and pay self-employment taxes, you use Schedule SE (Form 1040), not Form 941, which is for employers.
Read this next
Wondering how estimated tax payments fit in? Here’s a breakdown of what Form 1040-ES is and how to use it.
The bottom line on FICA taxes
FICA taxes fund the Social Security and Medicare programs that nearly every American worker will rely on eventually. Understanding how the rates work, what you have to withhold and match, and when deposits are due keeps you compliant and helps you avoid costly penalties.
For a broader look at how FICA fits into the payroll process from gross pay to net pay, check out our step-by-step guide to payroll processing.
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Erin Ellison is the former Content Marketing Manager for OnPay. She has more than 15 years of writing experience, is a former small business owner, and has managed payroll, scheduling, and HR for more than 75 employees. She lives and works in Atlanta.
Social Security Tax
The first component of FICA is Social Security Tax. As an employer, you must withhold 6.2% of each employee’s taxable gross wages to cover this tax, up to a maximum wage base limit. You also have to match each employee’s contribution dollar-for-dollar, up to the same limit.
For the 2026 tax year, the Social Security wage base is $184,500 (up from $176,100 in 2025)
Once an employee’s wages reach that threshold, Social Security Tax no longer applies for the remainder of the year. That means the maximum an employee contributes toward Social Security Tax in 2026 is:
Because employers match that contribution dollar-for-dollar, the combined Social Security Tax rate is 12.4%. Self-employed people pay the full 12.4% on their own net income from self-employment. We explain self-employment taxes in more detail below.