What is FICA Tax

| Updated on May 17, 2024
Stephanie

Written by Stephanie Glanville

Stephanie Glanville is the Marketing Manager of TaxBandits. She has several years of experience with IRS tax forms and the funtionality of TaxBandits. With a passion to help business owners better understand their IRS tax forms and filing, she aims to create content that is valuable and informative.

Every business owner who runs an organization and pays their employees must be aware of the taxes. One of the important taxes is FICA, which includes Social Security and Medicare tax. Let's understand What is FICA and how it affects the employee's paychecks.

Key Takeways:

  • FICA(Federal Insurance Contribution Act)taxes are payroll taxes that combine both Social Security and Medicare taxes.
  • Employers and employees must contribute a certain percentage.
  • The Social Security tax rate is 6.2% and the Medicare tax rate
    is 1.45%.
  • Self-employees who earn more than $400 should contribute the entire FICA tax on
    their own.

Total tax rate

The total FICA tax rate is 15.3%, So employers and employees must contribute 7.65% each.

FICA tax Employees pay Employers pay Wage base limit
Social security tax 6.2% 6.2% $168,600
Medicare tax 1.45% 1.45% Individuals earn more than $200,000; $250,000 for joint filers; $125,000 for those married filing separately
Additional Medicare tax 0.9% Aren’t subject to
medicare tax
Total FICA tax rate 15.3%

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