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FICA Tax
Definition
Federal payroll taxes funding Social Security and Medicare programs.
Explanation
FICA (Federal Insurance Contributions Act) totals 7.65% of wages: 6.2% for Social Security (up to the annual wage base limit of $168,600 in 2024) and 1.45% for Medicare (no cap). Employers match these amounts. Self-employed individuals pay both portions (15.3% total) but deduct half.
An additional 0.9% Medicare surtax applies to high earners over $200,000 single.
Example
On $50,000 salary: $3,100 Social Security + $725 Medicare = $3,825 total FICA withheld from paychecks.