Definition
Payroll taxes for Social Security and Medicare: employees pay 7.65% of wages and employers match it.
What it means
FICA stands for the Federal Insurance Contributions Act. Employers withhold 6.2% of wages for Social Security and 1.45% for Medicare from employees' pay and pay a matching 7.65% themselves. For 2026, the Social Security part stops once wages reach $184,500, while Medicare has no wage cap. Employers must also withhold an additional 0.9% Medicare tax on wages over $200,000 paid to an employee in a year. FICA taxes fund benefits and earn you credits toward Social Security and Medicare eligibility. Most pre-tax 401(k) contributions still count as FICA wages, while some health insurance premiums paid through a cafeteria plan do not. Self-employed people pay both halves through self-employment tax. Some nonresident students and scholars are exempt for a period.
Example
On $50,000 of wages, an employee pays $3,100 of Social Security tax and $725 of Medicare tax, or $3,825 in total, and the employer pays another $3,825.
Illustrative numbers only. Your situation will differ.