FICA taxes, which are also called payroll taxes, are mandatory for most working Americans and cover both Social Security and Medicare taxes. Whether you’re an employee or self-employed, you’re generally required to pay FICA tax on your earnings.
The FICA tax rate is 15.3 percent, though employees and employers split this cost, with each paying 7.65 percent of the employee’s income to the IRS. The FICA tax is automatically deducted from employees’ paychecks, while people who are self-employed are responsible for paying the tax directly to the IRS.
These payroll taxes are separate from and in addition to your income taxes.
What is FICA tax?
FICA tax is a mandatory payroll tax that was initiated in the 1930s through the Federal Insurance Contributions Act (FICA) to fund two financial programs for Americans. Today, there are two components to FICA tax: OASDI tax, which funds the Social Security program, and Medicare tax, which funds the Medicare program.
The law requires that, before issuing paychecks to employees, employers must deduct FICA tax, which is a percentage of an employee’s total earnings. Employers and employees split the FICA tax bill, whereas people who are self-employed must pay the full amount of the FICA tax directly to the IRS, along with their income tax, as part of their estimated taxes, due each quarter.
The OASDI, or Social Security, tax rate is 12.4 percent, while the Medicare tax rate is 2.9 percent. Added together, the total FICA tax rate is 15.3 percent.
As noted, this amount is split between the employer and employee, with each paying 7.65 percent of the employee’s wages to the IRS. Employers take care of sending both portions to the IRS.
That means employers deduct 6.2 percent of an employee’s earned income for OASDI tax and 1.45 percent for Medicare tax from every paycheck, and send that money to the IRS. In addition, the employer must also pay those same amounts to the IRS.
Self-employed people are responsible for paying the full 15.3 percent on their own.
| Social Security (OASDI) tax | Medicare tax |
| 6.2 percent paid by employee | 1.45 percent paid by employee |
|
6.2 percent paid by employer |
1.45 percent paid by employer |
|
Total: 12.4 percent |
Total: 2.9 percent |
There are a couple of special circumstances to consider:
- There’s an income limit for OASDI taxes, above which no OASDI tax is applied. In 2025, the so-called Social Security wage base limit is $176,100.
- There’s an extra 0.9 percent Medicare tax on incomes above $200,000 ($250,000 for married filing jointly filers; $125,000 for married filing separately filers).
Who has to pay FICA tax?
With very few exceptions, FICA tax is a mandatory payroll tax that must be paid by employees, employers and self-employed people to help fund the Social Security and Medicare programs.
Students who are employed by a school, college or university where they are pursuing a degree are exempt from paying FICA tax, as are some workers who are classified as nonresident aliens. Aside from those categories of workers, everyone else who has earned income must pay FICA tax.
How FICA tax works
FICA tax is actually two separate taxes — Social Security (OASDI) tax and Medicare tax. You may not see “FICA” listed among the payroll deductions on your paystub, but it’s the total amount withheld for both Social Security (OASDI) tax and Medicare tax.
These mandatory payroll taxes have set tax rates, which means you can’t adjust the amount of money withheld, as you can do for federal income taxes.
FICA tax supports the Social Security and Medicare programs that provide financial assistance to Americans, usually after they retire. Paying into these systems while you’re working is mandatory and should benefit you in the future in the form of Social Security and Medicare benefits.
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FICA vs. self-employment tax
If you’re self-employed, you’ll likely hear people refer to the self-employment tax — that’s another name for FICA taxes. For 2025, the self-employment tax rate is 15.3 percent and represents the combined total of Social Security and Medicare tax rates.
Whereas FICA tax is automatically withdrawn from the paychecks of people who are employees of an organization, independent contractors, small-business owners, freelancers, gig workers and any other taxpayers in business for themselves likely will need to pay the self-employment tax for any earned income.
FICA tax rates
The FICA tax rate is 15.3 percent, which is the total of the 12.4 percent OASDI tax and the 2.9 percent Medicare tax.
Social Security wage limit
The highest effective tax rate for FICA tax is 15.3 percent (you pay half of that if you’re an employee), but it could actually be slightly lower if your income exceeds a certain limit.
That’s because there’s an income limit of $176,100 in 2025 for the Social Security (OASDI) tax. (This amount is adjusted for inflation each year.) You don’t have to pay this tax on any income above that amount. That means that the maximum amount that employees will pay for Social Security (OASDI) tax in 2025 is $10,918.20 (calculated by multiplying $176,100 times 6.2 percent), and employers will pay this same amount.
However, there’s no comparable income limit for Medicare tax — no matter the amount of your earned income, you’ll pay the 2.9 percent tax rate.
Also, you may owe an additional 0.9 percent Medicare tax if your income tops $200,000 ($250,000 if married filing jointly; $125,000 if married filing separately).
Because of the income limit on OASDI tax, high earners have a lower effective FICA tax rate. Consider this:
- A single filer who’s an employee and earns $100,000 will pay $7,650 in FICA tax ($6,200 for OASDI tax and $1,450 for Medicare tax) for a 7.65 percent effective tax rate, which is exactly half of the 15.3 FICA tax rate (that person’s employer pays the other half).
- But an employee who earns $190,000 will pay $13,673.20 in FICA tax (the limit of $10,918.20 for OASDI tax in 2025, plus $2,755 for Medicare tax), for a slightly lower 7.2 effective tax rate.
Tracking your FICA tax
Because Social Security and Medicare taxes are automatically deducted from employees’ paychecks, many people may not even realize they pay FICA tax. But this information is included on your year-end W-2 form that you use to prepare your taxes.
As an employee, your FICA tax rate should never exceed 7.65 percent. Your effective rate could be lower if you earn more than the income threshold for OASDI tax. But if you exceed the Medicare income limits described above, then you’ll owe that additional 0.9 percent tax.
Tracking your gross income and net income is more important if you’re self-employed so that you can remit the correct amount to the IRS when you pay quarterly estimated taxes. And if you earn more than that income threshold, you’ll need to adjust the amount you set aside for FICA tax accordingly.
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