What Is FICA Tax? Social Security and Medicare Explained (2026)
FICA takes 7.65% from every paycheck — more than most state taxes. Here’s exactly what you’re paying, the wage cap, and what you get back.
FICA stands for the Federal Insurance Contributions Act, and it funds two programs: Social Security and Medicare. Combined, they take 7.65% from every paycheck you earn — 6.2% for Social Security and 1.45% for Medicare. On a $75,000 salary, that’s $5,737.50 per year, or $220.67 per biweekly paycheck. For most workers, FICA costs more than state income tax.
Social Security tax (6.2%) has a wage base cap that adjusts annually for inflation. In 2026, the cap is $184,500 — meaning you stop paying Social Security tax after earning that amount. Maximum Social Security tax per worker: $11,439. If you earn $250,000, you pay the same $11,439 as someone earning $184,500. Above the cap, your effective SS rate drops. Medicare (1.45%) has no cap whatsoever — every dollar you earn is taxed.
High earners face an Additional Medicare Tax of 0.9% on wages above $200,000 (single) or $250,000 (married filing jointly). This surtax, introduced by the Affordable Care Act, is paid only by the employee — employers don’t match it. A single filer earning $300,000 pays: 1.45% on all $300,000 ($4,350) plus 0.9% on $100,000 above the threshold ($900) = $5,250 total Medicare tax.
Your employer matches your FICA contributions dollar-for-dollar — they pay an additional 6.2% for Social Security and 1.45% for Medicare on your behalf. You never see this money, but it’s a real cost of employing you. On a $75,000 salary, your employer pays $5,737.50 in FICA taxes, bringing the total FICA contribution to $11,475. This is why your ‘total compensation cost’ to the company exceeds your salary by 7.65% or more.
Self-employed individuals pay both halves — the full 15.3% — through self-employment tax. On $100,000 of net self-employment income, that’s $14,130 (after the 92.35% calculation adjustment the IRS applies). The IRS does allow self-employed workers to deduct the employer-equivalent half (7.65%) from their gross income, which reduces income tax but doesn’t reduce the self-employment tax itself.
What you get back: Social Security benefits at retirement are based on your 35 highest-earning years. The average monthly Social Security benefit in 2026 is $1,976, with the maximum at $4,873 for those who earned at or above the wage cap for 35 years. Medicare provides health insurance starting at age 65. Whether FICA is a ‘good deal’ depends on your lifespan and health costs, but it’s not optional — every W-2 employee and self-employed worker pays it on every dollar earned.
Calculations use 2026 IRS federal tax brackets (Rev. Proc. 2025-11), state revenue department publications updated through Mar 28, 2026, and Bureau of Labor Statistics CPI-U annual averages. See our editorial standards and methodology for full sourcing.
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