FICA is the payroll tax deducted from nearly every American paycheck to fund Social Security and Medicare. It is separate from income tax and applies from your very first dollar of wages, with no deductions or brackets. Knowing how it works explains why your take-home pay is smaller than your salary suggests.
What FICA covers
FICA stands for the Federal Insurance Contributions Act, and it funds two programs: Social Security, which pays retirement and disability benefits, and Medicare, which provides health coverage for people 65 and older. The tax is split between you and your employer, each paying an equal share. Unlike income tax, it has no standard deduction — it applies to gross wages from dollar one. Your contributions also build your future Social Security benefit.
The rates and the wage cap
Employees pay 6.2% for Social Security and 1.45% for Medicare, a combined 7.65%, and the employer matches it. The Social Security portion applies only up to an annual wage base, about $176,100 in 2025, after which it stops. The Medicare portion has no cap and applies to all wages. High earners also pay an additional 0.9% Medicare surtax on wages above $200,000 (single) or $250,000 (married filing jointly).
Employees vs. the self-employed
Because an employer pays half of FICA for an employee, workers only feel 7.65% of the 15.3% total. The self-employed pay both halves as self-employment tax, though they get to deduct half of it. This is why leaving employment for freelancing raises your payroll-tax burden. The programs are funded the same way regardless of who writes the check.
Why it is not refundable
FICA is not part of your income tax and does not come back as a refund the way over-withheld income tax can. It is a dedicated contribution to Social Security and Medicare, tracked toward your future benefits. You cannot reduce it with the standard deduction, itemized deductions, or most tax credits. Only certain pre-tax deductions, like some health premiums, lower the wages it is calculated on.
On a $100,000 salary in 2025, an employee pays 6.2% Social Security ($6,200) and 1.45% Medicare ($1,450), totaling $7,650 in FICA. The employer pays another $7,650, so the government collects $15,300 toward Social Security and Medicare on that salary.
Key takeaways
- FICA funds Social Security and Medicare and is separate from income tax.
- Employees pay 7.65% (6.2% Social Security plus 1.45% Medicare), matched by the employer.
- Social Security tax stops at an annual wage cap; Medicare tax has no cap.
- High earners pay an extra 0.9% Medicare surtax above set thresholds.
- FICA is not refundable and cannot be reduced by the standard deduction or most credits.
Common mistakes
- Confusing FICA with federal income tax when reading a pay stub.
- Expecting FICA to come back as part of a tax refund.
- Assuming Social Security tax applies to an unlimited salary — it stops at the wage cap.
FAQ
Can I get my FICA taxes back?
Generally no, because FICA funds your future Social Security and Medicare benefits rather than acting as a prepayment of income tax; only rare over-withholding from multiple jobs is refundable.
Do 401(k) contributions reduce FICA?
No — traditional 401(k) contributions lower your income tax but not your FICA, so Social Security and Medicare are still calculated on the full wage.