FICA Tax: Rates, Calculation, and Employer Duties
FICA is 7.65% from the employee and 7.65% from you. The 2026 rates, the wage base, how to calculate and deposit it, and the penalty that reaches you.
FICA Tax
The 2026 rates, how to calculate it, what every label on the pay stub means, and the one penalty in payroll that can reach past your business to you personally
An employee is standing at your desk holding a pay stub, pointing at a line that says Fed MED/EE, asking what it is. And you do not entirely know either, because your payroll system produced it and nobody has ever explained the vocabulary.
That is the small version of this problem. The large version is that FICA is the tax with the sharpest teeth in the entire payroll system, and almost nobody who runs a small business knows why. The money you withhold from your employees for Social Security and Medicare is not a bill you owe. It is money you are holding, and if you fail to hand it over, the IRS can reach past your LLC, past your corporation, past bankruptcy, and take it from you personally.
This page is everything: the 2026 rates, how to calculate it, what every single abbreviation on a pay stub means, how to deposit and report it, and the penalty that follows you home. I build FirstHR, which holds the employee records payroll runs on. One caveat that carries real weight here: this is tax law, the wage base changes annually, and I am not a tax professional. Verify against the IRS before you configure anything.
What Is FICA Tax?
FICA is the federal payroll tax that funds Social Security and Medicare. It is paid twice on every dollar of wages: once by the employee through withholding, and once by the employer on top.
The IRS overview of employment taxes is the official version of everything on this page, and it is short enough to read once properly.
Three facts follow from that, and they are the three that matter.
FICA is two taxes, not one. Social Security and Medicare are separate, have different rates, and behave differently: one has a cap and one does not. Half the confusion on this subject comes from treating FICA as a single thing.
You pay it twice. Whatever you withhold from the employee, you pay again out of your own pocket. The employee sees 7.65 percent leave their check and reasonably assumes that is the tax. The tax is 15.3 percent, and they will never see the other half on any document they receive.
The employee half is not yours. This is the fact this entire page is built around, and we will come back to it with considerable force.
The 2026 Rates
Here is the whole answer, on one card. Most of the questions people arrive at this page asking are answered by this.
FICA is one component of the wider payroll obligation, and how it fits with everything else is covered in the payroll guide. The step-by-step procedure for actually running a payroll is in how to run payroll.
The rates themselves have not moved in decades and are unlikely to move soon. The only number that changes is the wage base, and it changes every January. That single fact tells you exactly what maintenance this part of payroll requires: check the wage base each year, and change nothing else.
It also tells you how to spot a stale page. If an article tells you the wage base is $176,100, it is describing 2025. If it says $168,600, that is 2023. There are a great many of both still ranking, and configuring payroll from one will cause you to under-withhold every high earner you employ.
Who Pays It
Both of you, equally, and this symmetry is unusual. Most payroll taxes fall on one side or the other. FICA falls on both.
| Employee | Employer | |
|---|---|---|
| Pays Social Security at 6.2% | ||
| Pays Medicare at 1.45% | ||
| Pays the 0.9% Additional Medicare Tax | ||
| Sees it on their pay stub | ||
| Sees the other side's contribution | ||
| Is legally responsible for depositing it | ||
| Can be personally penalized if it is not paid |
The employee-facing half of this is worth being able to explain, and the page to send them is gross pay versus net pay, which walks through every line on a stub rather than only FICA.
Read the bottom three rows together, because they describe an asymmetry that matters enormously. The employee pays half the tax, sees only their half, and bears none of the compliance risk. You pay half the tax, see all of it, and carry all of the risk, including the risk that reaches your personal assets.
That is not a complaint. It is the correct allocation, since you are the one holding the money. But it means FICA is a much bigger deal for you than it is for the person asking you about it, and it explains why this article is longer than the one they would need.
The full picture of what you owe on top of wages, beyond FICA, is in statutory benefits, and it comes to roughly 8 to 10 percent of payroll once unemployment tax is counted.
The Social Security Half
6.2 percent from the employee, 6.2 percent from you, on wages up to $184,500 in 2026. Formally it is OASDI: Old-Age, Survivors, and Disability Insurance, which is why it shows up on some pay stubs as Fed OASDI/EE rather than as anything containing the word Social.
The defining feature of the Social Security half is the wage base. Once an employee's year-to-date wages cross it, you stop withholding for the rest of the calendar year, and you stop matching. It is the only cap anywhere in FICA and it is the source of most of the interesting behavior.
| Year | Wage base | Maximum Social Security tax, each side |
|---|---|---|
| 2026 | $184,500 | $11,439.00 |
| 2025 | $176,100 | $10,918.20 |
| 2024 | $168,600 | $10,453.20 |
| 2023 | $160,200 | $9,932.40 |
That table exists for one reason: to let you check whether whatever source you are reading is current. The base rises most years, and any page quoting an old figure is a page whose other advice you should also doubt.
The maximum column is worth noting too. In 2026, the most any single employee can pay in Social Security tax is $11,439, and the most you can pay for them is the same. That is your ceiling per person, and it is one of the very few costs in payroll that has a ceiling at all.
The Medicare Half
1.45 percent from the employee, 1.45 percent from you, on every single dollar. Formally it is HI, Hospital Insurance, which is why it appears on stubs as Fed MED/EE or MEDFICA or FICA-MED, all meaning the same thing.
Because Medicare has no cap, it is the simpler of the two to calculate and the one you are least likely to get wrong. Multiply gross by 0.0145, every period, forever. The only complication is what sits on top of it, which is the next section.
The Additional Medicare Tax
An extra 0.9 percent on employee wages above $200,000 in a calendar year. It has two properties that make it genuinely strange, and both of them catch employers out.
The second strange property: you withhold based on wages from you alone, regardless of the employee's filing status. The actual liability for this tax depends on the employee's household situation, with different thresholds for married couples, but that is settled on their tax return. Your obligation is mechanical: once they cross $200,000 with you, you withhold, and you do not adjust for anything they tell you about their spouse.
Practically, this means two things can happen and both are correct. An employee can have this tax withheld and end up owing nothing, getting it back on their return. Or an employee can have nothing withheld by you, because they earned $150,000 with you, and still owe the tax because their household total crossed the threshold. Neither is your problem, and neither is a payroll error.
How to Calculate It
The arithmetic is trivial. What is not trivial is knowing what to multiply.
That distinction is the single most common source of a FICA miscalculation at a small business, and it produces an error that nobody notices because it is small on each check and never triggers an obvious symptom. It surfaces at reconciliation, or it does not surface at all until an audit. The mechanics of deduction ordering are covered in gross pay versus net pay.
The wider category of employer-side non-cash compensation, some of which is taxable wages even though no money changed hands, is covered in fringe benefits.
The other practical note: the Section 125 exception is genuinely valuable and worth understanding as a benefits decision rather than only a payroll one. A health premium taken pre-tax through a proper cafeteria plan costs you less than its face value, because you are matching FICA on a smaller wage base. It is one of the very few benefits where the tax code is generous to both sides.
Crossing the Wage Base
Something happens every autumn at any business with a well-paid employee, and almost nobody explains it in advance: their paycheck suddenly gets bigger, and nothing is wrong.
The mechanics: once year-to-date wages exceed $184,500, Social Security withholding stops. Their net pay rises by 6.2 percent of gross. Medicare keeps going, because Medicare has no cap, so the increase is 6.2 percent rather than the full 7.65 percent.
Your matching contribution stops at the same moment, which is worth knowing because it is one of the very few places in payroll where your cost per employee falls. Everything else about employing someone gets more expensive over time. This gets cheaper, once a year, for your highest earners.
The same crossover is explained from the employee's side, alongside every other deduction, in gross pay versus net pay, which is the page to send someone who wants to understand their own paycheck rather than your obligations.
And then it all resets on January 1, their net pay drops back, and they ask you why. Tell them in advance, in both directions, and you will never have either conversation.
Every Pay Stub Label
Here is the section that does not exist anywhere else, and it is the one that will save you the most time. Payroll systems label these two taxes about eight different ways, and every one of those labels generates employee questions that land on you.
These labels come out of whatever payroll system produced the stub, and the contents of the stub itself are regulated: most states require an itemized wage statement and specify what must appear on it. The requirements are covered in the payroll run guide.
The decoder ring, in one sentence: EE means employee, ER means employer, OASDI means Social Security, MED and HI mean Medicare, and everything else is a synonym. There are only two taxes on that entire list. Every label is one of those two, or a combination of them.
The one that genuinely confuses people is a stub showing both EE and ER lines. An employee sees Fed OASDI/EE at $310 and Fed OASDI/ER at $310, adds them, and concludes they were charged $620. They were not. Only the EE line came out of their pay. The ER line is displayed for transparency and is a cost you bore, which most employers never get any credit for.
Giving employees a way to see their own stubs and year-to-date totals through an employee self-service portal removes a surprising amount of this, because the person who wants to check a number can go and check it rather than asking you.
Depositing It
You withheld it. Now you have to hand it over, and the schedule for doing so is not the schedule on which you pay your employees. This is the distinction that generates more penalties than any other in payroll.
The full set of deadlines is in the IRS guidance on depositing and reporting employment taxes, and the calendar in employment tax due dates.
You deposit both halves together: the employee FICA you withheld, plus your matching employer FICA, in one payment. It goes through EFTPS, electronically, because there is no paper option for most employers.
Note that your deposit schedule is a separate thing from your pay schedule, and confusing the two is the most common way an employer who paid everybody correctly still gets penalized.
Late deposits carry a failure-to-deposit penalty that escalates in tiers with how late you are, plus interest. That penalty is annoying but survivable. What follows it, if the money never arrives at all, is not, and that is the next section but one.
The practical instruction, and it is genuinely the highest-value thing in this article after the trust fund section: put all twelve deposit deadlines on a calendar today, for the whole year, with reminders. Not in your head. The single most common way a careful employer gets penalized is not refusal to pay. It is that the 15th arrived while they were busy and nobody had written it down.
Reporting It
Depositing is the money. Reporting is the paperwork, and they are separate obligations with separate deadlines.
| What | When | What it shows |
|---|---|---|
| Form 941 | Quarterly, by the end of the month after the quarter | Wages paid and FICA for the quarter: both the withheld employee half and your matching half |
| Form 944 | Annually, by January 31 | The annual alternative to 941, for very small employers. Only if the IRS tells you to use it |
| W-2 Box 3 | By January 31 | Social Security wages: the wages subject to the 6.2%, capped at the wage base |
| W-2 Box 4 | By January 31 | Social Security tax withheld from that employee for the year |
| W-2 Box 5 | By January 31 | Medicare wages: uncapped, so this is often larger than Box 3 |
| W-2 Box 6 | By January 31 | Medicare tax withheld, including any Additional Medicare Tax |
Where these records live matters, because you must retain them. Employment tax records must be kept for at least four years, and where they belong is covered in personnel files.
Two things in that table are worth pausing on. Box 3 and Box 5 are different numbers for any employee who crossed the wage base, because Box 3 is capped at $184,500 and Box 5 is not. An employee earning $250,000 has $184,500 in Box 3 and $250,000 in Box 5, and if both boxes match on a high earner's W-2, something is wrong.
And your W-2 totals must reconcile to your four quarterly 941 filings. The Social Security Administration performs this check on you. Performing it yourself first, in December, is straightforwardly a good idea, and it is a twenty-minute job that catches errors while they are still small.
The forms themselves are on the IRS site: Form 941 and Form W-2.
Reconciling It
Reconciliation is checking that your own numbers agree with each other. It is dull, it takes twenty minutes a quarter, and it is the highest-return habit in payroll because it catches FICA errors while they are still small enough to fix cheaply.
The data all of this depends on originates at onboarding rather than in payroll: the W-4, the pay rate, the classification. Collecting it properly is covered in new hire paperwork, and getting it wrong there is what produces a FICA error months later.
The quarterly reconciliation against Form 941 is the one to be religious about. That form is a sworn statement of what you withheld and what you owe, and the IRS reconciles it against what actually arrived. If your register, your 941, and your deposits all agree, you are in a defensible position regardless of what else happens.
The mundane truth of small business FICA errors is that they are almost never sophisticated. A duplicated row. A wage base that was never updated. A deduction applied to the wrong base. Twenty minutes of looking finds them, and finding them in March is a different experience from finding them in a notice fourteen months later.
Fixing FICA Errors
You will make one. Everybody does. What separates a manageable error from an expensive one is catching it early and correcting it properly.
An over-withholding correction paid back to the employee is not the same as a retro pay adjustment, though the two get confused. Retro pay is wages you underpaid. A FICA refund is tax you over-collected, and they are recorded differently.
The under-withholding case is the one with teeth, and the reason is uncomfortable. If you failed to withhold enough FICA from an employee and the year has closed, you may end up paying their share yourself. Recovering it from them months later is difficult, sometimes not permitted, and always a bad conversation. The obligation to withhold correctly is yours, and the consequence of failing to do so does not transfer to the employee.
The over-withholding case has a specific procedural wrinkle worth knowing: you must refund or reimburse the employee first, before claiming the adjustment from the IRS. You cannot recover the money from the government and then decide how much of it to pass on. Repay them, document it, and then file the correction.
And the general principle across every row: self-correcting is always cheaper than being found. Penalties for errors you discover and fix are materially lower than penalties for errors an agency discovers, and the difference is not marginal.
The Penalty That Follows You Home
Everything above this section is arithmetic and administration. This section is the reason FICA is different from every other cost of running a business, and if you read nothing else here, read this.
The money you withhold from your employees is not yours, and it never was. It is not revenue, it is not working capital, and it is not a bill you owe. You are holding it in trust for the government, on behalf of your employees, for a short period before handing it over. That is why it is called trust fund money.
Read that last sentence again, slowly, because it is far broader than the word willful suggests. There is no requirement of evil intent, no requirement of an attempt to defraud, and no requirement that you meant to do anything wrong at all. Paying your landlord, when you knew the payroll taxes were due, is enough. That is the standard. It describes a decision that almost every struggling business owner has made at least once.
Three further points, each of which is the sort of thing you would rather know in advance.
It only covers the employee half. The penalty applies to withheld income tax and the employee's share of Social Security and Medicare. Your matching employer share, though genuinely owed, is not trust fund money and is not subject to the personal penalty. This is a detail almost every article gets wrong, and it means the exposure is smaller than the headline but still large: roughly a fifth to a quarter of every quarterly 941 liability is trust fund money.
The corporate form does not protect you. This is the exception to the entire premise of limited liability. The penalty survives business closure, entity dissolution, and in most cases bankruptcy. The IRS can file a lien against your home, levy your personal accounts, and garnish your future wages. An LLC is not a shield here, and neither is an S corp.
More than one person can be liable. Responsibility turns on who could effectively control which bills got paid. That can be an owner, a bookkeeper, an office manager, or a CFO, and each responsible person is jointly and severally liable for the whole amount. Being a non-owner employee does not automatically protect you, and instructions from a superior not to pay do not immunize you either.
That is the practical advice this whole section exists to deliver. Move it out of the account. Not because you lack discipline, but because the failure mode here is not dishonesty, it is a cash crunch in which the money is sitting there, indistinguishable from every other dollar, and the rent is due. If it is not in the account, that decision never presents itself.
And if you are ever in a position where paying the taxes means not paying somebody else, pay the taxes. That is the one bill where the consequence of not paying reaches past your business and follows you home.
Who Is Exempt
Almost nobody, and the exemptions people assume exist mostly do not.
| Situation | Exempt from FICA? | The actual rule |
|---|---|---|
| Part-time employees | No | FICA applies to wages, not schedules. Same 7.65% per dollar as full-time |
| Employees already drawing Social Security | No | There is no age exemption. They still pay FICA on wages, and so do you |
| Employees under 18 | Generally no | A narrow exception exists for a child working for a parent's unincorporated business |
| Independent contractors | Yes, in the sense that no FICA applies | They are not employees. They pay self-employment tax themselves instead |
| Certain student employees | Sometimes | Students employed by the school they attend, where the work is incidental to study |
| Certain nonresident aliens | Sometimes | Depends on visa type. F-1, J-1, M-1, Q-1 holders may be exempt in specific circumstances |
| Members of certain religious groups | Sometimes | A recognized exemption requiring an approved application, and it is narrow |
| Sole proprietors and partners | Not applicable | They are not employees. They pay self-employment tax on business profit |
The contractor row is the one with real consequences attached. Misclassifying an employee as a contractor to avoid employer FICA is the most expensive routine mistake available to a small business, and the test is in employee versus contractor.
The first two rows are the ones people get wrong most often. Part-time employees generate the identical FICA obligation per dollar of wages as full-time ones. Hiring part-time reduces your total wage bill and therefore your total FICA, but it does not reduce the rate, and an employer who believes part-time staff are somehow cheaper per dollar is mistaken.
And there is no age exemption. A 70-year-old who is already collecting Social Security benefits still pays FICA on any wages they earn, and you still match it. This surprises people, and it surprises the employee more than it surprises you.
If You Are the Owner
Whether you pay FICA depends entirely on how your business is structured, and for two of the three common structures the answer is that you do not pay FICA at all. You pay something else that costs the same.
| Your entity | Do you pay FICA? | What you actually pay |
|---|---|---|
| Sole proprietor | No. You are not an employee | Self-employment tax: 15.3% on net earnings, being both halves of FICA in one payment |
| Partnership or multi-member LLC | No. Partners are not employees | Self-employment tax on your share of the profit, through your personal return |
| S corporation shareholder-employee | Yes. You are an employee | FICA on your wages, withheld and matched by the company, exactly like any employee |
| S corp distributions | No FICA on distributions | Which is the entire tax appeal of the S corp election, and also the trap |
The S corp row is where the interesting problem lives. Wages get FICA. Distributions do not. So the arithmetic says pay yourself a small salary and take the rest as distributions, and the IRS is entirely aware of that arithmetic, which is why the reasonable compensation requirement exists. An S corp must pay reasonable compensation to a working shareholder before making distributions, and the IRS can and does reclassify distributions as wages where the salary is implausibly low.
Note also that self-employment tax is 15.3 percent, which is not a coincidence. It is both halves of FICA, combined, because as a sole proprietor you are simultaneously the employer and the employee. You do not escape FICA by not being on payroll. You pay all of it yourself, through a different mechanism.
Wages That Confuse People
Not everything you pay an employee is obviously wages, and the answer on FICA is more consistent than people expect: almost all of it is.
| Payment | Subject to FICA? | Note |
|---|---|---|
| Bonuses | Yes, in full | Federal income tax withholding differs, at a flat 22%, but FICA is identical to regular wages |
| Commissions | Yes | Wages. Same 6.2% and 1.45%, both sides |
| Overtime | Yes | Wages. No reduced rate for overtime, despite a persistent employee belief otherwise |
| Retroactive pay | Yes | It is wages you owed. Taxed as wages when paid |
| Severance pay | Yes | Generally treated as wages and subject to FICA |
| Tips reported by the employee | Yes | Both sides. The employer owes matching FICA on reported tips |
| Gift cards, any amount | Yes | Cash equivalents are always wages. There is no de minimis exception for them |
| Traditional 401(k) contributions | Yes | Escapes income tax but NOT FICA. The classic error |
| Section 125 health premiums | No | Reduces the FICA base, lowering both the employee's FICA and your match |
| Reimbursed business expenses | No, under an accountable plan | Not wages, provided the plan meets the IRS requirements |
Two rows there have guides of their own worth reading. Bonuses and commissions are supplemental pay, which affects income tax withholding but not FICA. And a correction to an underpayment is retro pay, which is wages and therefore fully subject to FICA on both sides.
The gift card row deserves a note because it catches generous employers. A gift card is a cash equivalent and is therefore wages, at any amount. A $25 card handed out as a thank-you is technically reportable wages subject to FICA. It is a strange rule, it feels petty, and it is the rule.
And the 401(k) row is the one that quietly corrupts payroll. It sits directly above the Section 125 row for a reason: they look like the same category of deduction and they behave completely differently. Getting this wrong under-withholds FICA on every check for the entire year.
What It Costs You
Abstract percentages are easy to nod at and hard to feel. Here is FICA as an actual line in an actual budget, for an actual small business.
The number that should stay with you is the last one: $4,590 per employee per year, on a $60,000 salary, purely in employer FICA. That is before unemployment tax, before workers' compensation, and before you have offered health insurance, a retirement match, or a single day of paid leave.
The full arithmetic of what an employee costs once benefits are added is in how much benefits cost per employee, and the mandatory floor beneath it is workers' compensation insurance.
Which is why the practical rule for hiring is to never say a salary number out loud until you have multiplied it by at least 1.1, and preferably 1.3 once benefits are counted. A $60,000 hire is not a $60,000 decision. It is closer to $66,000 before you have been generous about anything, and businesses that budget on salary alone discover this in month two.
The red row matters for a different reason. Across a year, a five-person business is holding nearly $23,000 of money that is not its own. It arrives in the operating account, it sits there indistinguishable from revenue, and it leaves again. At no point is it yours, and the size of that number is a reasonable measure of the exposure you are carrying if you have never thought about where it lives.
FICA and Your State
Short section, because the answer is simple and the confusion is common. FICA is entirely federal. There is no state FICA, no state version of it, and no state that opts out.
What states do have is their own separate payroll taxes, which sit alongside FICA and are frequently confused with it because they appear on the same pay stub and go out in the same run.
| Tax | Federal or state? | Who pays |
|---|---|---|
| FICA: Social Security and Medicare | Federal. Identical in all 50 states | Employee and employer, matched |
| Federal income tax withholding | Federal | Employee only. You withhold, you do not match |
| FUTA, federal unemployment | Federal | Employer only. The employee never sees it |
| SUTA, state unemployment | State. Rate varies | Employer, in most states |
| State income tax withholding | State. Nine states have none | Employee only |
| State disability insurance | State. A handful of states | Usually employee-funded. California's CASDI is an example |
| Local income tax | Municipal. A few cities | Employee only |
The row people conflate with FICA most often is state disability insurance, because it is another mandatory deduction that appears near the FICA lines on the stub. California's CASDI is the best known example, and it is employee-funded, state-level, and has nothing whatever to do with Social Security or Medicare.
The other state-level obligations that do change with a remote hire, including registration and unemployment insurance, are covered in human resource laws.
The practical consequence for a multi-state employer: FICA is the one thing that does not change when you hire in a new state. Everything else does. The rate is the same in Texas and in New York, the wage base is the same, the deposit rules are the same. It is the single most portable part of payroll, and that is worth knowing when a remote hire generates a pile of new obligations, because FICA is not one of them.
Where FICA Came From
Brief, and worth knowing because it explains the shape of the tax and answers the question employees actually ask, which is not what is this but what am I getting for it.
The Federal Insurance Contributions Act dates to 1935, enacted alongside the Social Security Act during the Depression. The original design principle is visible in the name: contributions, not taxes. The idea was that workers and employers would jointly fund an insurance system that workers would later draw from, which is why the tax is split evenly rather than falling entirely on one side.
Medicare was added in 1965, which is why FICA has two components with different rates and different rules. They were bolted together, and the wage cap on Social Security but not on Medicare is a fossil of that history rather than a considered design.
What your employee gets for it, concretely: Social Security pays retirement benefits, disability benefits, and survivor benefits to their family. Medicare funds hospital insurance from age 65. Eligibility for both is earned through work credits, accumulated by paying this tax. So the honest answer to what is this deduction for is that it is buying them something specific, and it is one of the few payroll deductions where that is true.
The employer side of that same bargain, meaning everything the law requires you to fund on an employee's behalf, is set out in statutory benefits.
That is also a genuinely useful thing to be able to say to an employee who resents the line on their stub. It is not disappearing into a general fund. It is the mechanism by which they qualify for the two programs most people in the US eventually rely on, and you are paying the same amount again on their behalf.
Common Mistakes
Seven recurring failures, and one of them can take your house.
Most of these are process failures rather than knowledge failures, which is the practical case for payroll automation: a system updates the wage base in January without being asked, and applies the correct base to the correct tax every single time.
The deposit calendar and the separate account are the two habits that do almost all the work. Neither is clever, neither costs anything, and together they eliminate the failure mode that ends businesses.
Frequently Asked Questions
What is FICA tax?
FICA stands for the Federal Insurance Contributions Act. It is the federal payroll tax that funds Social Security and Medicare, and it is paid twice on every dollar of wages: once by the employee, through withholding, and once by the employer, on top of the wages. The employee pays 7.65 percent, being 6.2 percent for Social Security and 1.45 percent for Medicare. The employer pays an identical 7.65 percent. Combined, 15.3 percent of every employee's gross wages goes to the IRS as FICA, and the employer is responsible for withholding, depositing, and reporting all of it.
What is the FICA tax rate for 2026?
7.65 percent from the employee and 7.65 percent from the employer, for a combined 15.3 percent. That splits into Social Security at 6.2 percent each side and Medicare at 1.45 percent each side. Social Security applies only up to the annual wage base, which is $184,500 for 2026, up from $176,100 in 2025. Medicare has no wage base and applies to every dollar. There is also an Additional Medicare Tax of 0.9 percent on employee wages above $200,000, which the employer must withhold but does not match.
How much is FICA tax?
For the employee, 7.65 percent of gross wages, which on a $5,000 paycheck is $382.50. For the employer, the same again: another $382.50. So $765 total leaves for the IRS on that one paycheck. The employee only ever sees their half on the pay stub, which is why most people think FICA is 7.65 percent when the real cost of the tax on a given wage is double that. On wages above the Social Security wage base of $184,500, the rate drops to 1.45 percent each side, because Social Security stops and only Medicare continues.
What is the FICA tax rate for employers?
7.65 percent of each employee's gross wages, matching exactly what you withhold from them: 6.2 percent for Social Security up to the annual wage base, and 1.45 percent for Medicare with no cap. This is a cost of employment paid on top of wages and it is never deducted from the employee. The one exception to the matching rule is the Additional Medicare Tax: you must withhold 0.9 percent on employee wages above $200,000, but there is no employer match on that portion. So above $200,000, the employee pays more than you do.
Is FICA the same as Social Security?
No. Social Security is one half of FICA. FICA is the umbrella term for two separate taxes: Social Security, formally called Old-Age, Survivors, and Disability Insurance or OASDI, at 6.2 percent, and Medicare, formally called Hospital Insurance or HI, at 1.45 percent. On a pay stub they may appear as separate lines labeled FICA-SS and FICA-MED, or as Fed OASDI/EE and Fed MED/EE, or lumped together as one FICA line. They are the same two taxes regardless of what your payroll system calls them.
Is FICA Medicare?
Medicare is part of FICA, but FICA is not only Medicare. FICA consists of two components: Social Security at 6.2 percent and Medicare at 1.45 percent. When a pay stub shows a line labeled FICA-MED, MEDFICA, or Fed MED/EE, that is the Medicare portion of FICA specifically. When it shows FICA-SS or Fed OASDI/EE, that is the Social Security portion. If a stub shows only a single FICA line, it usually combines both at 7.65 percent.
What does FICA EE mean on a pay stub?
EE means employee. FICA EE is therefore the employee's share of FICA, meaning the amount withheld from that person's paycheck. You will also see ER, which means employer, on stubs that display both sides. The employee share is 7.65 percent of gross wages, and the employer share is an identical 7.65 percent that the employer pays on top. Some stubs display both, which occasionally leads employees to believe they were charged twice. They were not: only the EE line comes out of their pay.
What is Fed MED/EE on my pay stub?
The Medicare portion of FICA, withheld from the employee. Fed means federal, MED means Medicare, and EE means employee. It is 1.45 percent of gross wages with no cap at any income level. Its sibling is Fed OASDI/EE, which is the Social Security portion at 6.2 percent, where OASDI stands for Old-Age, Survivors, and Disability Insurance. Different payroll systems use different labels for the same two taxes, which is the entire reason these abbreviations generate so many employee questions.
What is MEDFICA?
MEDFICA is a compressed pay stub label for the Medicare portion of FICA. It is not a separate or additional tax. It is 1.45 percent of gross wages, withheld from the employee, matched by the employer, and applied to every dollar with no wage cap. Payroll systems abbreviate these labels differently, which is why the same tax appears variously as Medicare, FICA-MED, Fed MED/EE, or MEDFICA depending on which system produced the stub.
What is the FICA wage base for 2026?
$184,500, up from $176,100 in 2025. This is the Social Security wage base, and once an employee's year-to-date wages exceed it you stop withholding the 6.2 percent Social Security tax for the remainder of the calendar year, and you stop matching it. Medicare has no wage base at all and continues at 1.45 percent on every dollar regardless of how much the employee earns. The wage base is adjusted annually and it is the only figure in FICA that changes, which makes it the one you must re-verify each January.
How do I calculate FICA tax?
Multiply the employee's gross wages for the pay period by 6.2 percent for Social Security and by 1.45 percent for Medicare, then withhold both. Then calculate the identical amounts again as your employer share. On $5,000 of gross pay, that is $310 plus $72.50, which is $382.50 withheld from the employee, and another $382.50 that you owe. Calculate FICA from gross wages, not from taxable wages after pre-tax deductions, with one important exception: a Section 125 health premium does reduce the FICA base, while a traditional 401(k) contribution does not.
Does a 401(k) contribution reduce FICA?
No, and this is one of the most common payroll errors. A traditional 401(k) contribution reduces the employee's taxable wages for federal income tax purposes, but it does not reduce the base for Social Security and Medicare. The employee still pays FICA on money they deferred into their retirement plan, and so do you. By contrast, a health insurance premium taken pre-tax through a Section 125 cafeteria plan does reduce the FICA base, which lowers both the employee's FICA and your matching contribution.
What happens if I do not deposit FICA taxes?
Penalties, and then something much worse. Late deposits carry a failure-to-deposit penalty that escalates in tiers with lateness, plus interest. But the withheld employee portion of FICA is trust fund money, held on the employee's behalf, and if it goes unpaid the IRS can assess the Trust Fund Recovery Penalty under IRC section 6672. That penalty is 100 percent of the unpaid trust fund tax, assessed personally against any responsible person, and it survives business closure, dissolution, and in most cases bankruptcy. The corporate form does not protect you from it.
Who is a responsible person for FICA penalties?
Anyone with the duty and the authority to collect, account for, and pay over the withheld taxes. The IRS says this can be an officer of a corporation, a partner, a sole proprietor, or an employee of any form of business, and a trustee or agent with authority over the funds can also be held responsible. The practical test is who can effectively control which bills get paid and when. More than one person can be a responsible person for the same quarter, and each is jointly and severally liable. Being a non-owner employee does not automatically protect you.
What does willful mean for the Trust Fund Recovery Penalty?
Much less than it sounds. The IRS says willfully means voluntarily, consciously, and intentionally, and states plainly that you are acting willfully if you pay other expenses of the business instead of the withholding taxes. No evil intent, no bad motive, and no attempt to defraud is required. Paying your landlord when you knew the payroll taxes were due is enough. Recklessly disregarding an obvious risk that the taxes were not being paid also counts, which means ignoring IRS notices satisfies the test.
Is the employer match part of the Trust Fund Recovery Penalty?
No, and this is a detail almost everyone gets wrong. The Trust Fund Recovery Penalty applies only to the employee's portion of employment taxes, meaning the withheld income tax and the employee's half of Social Security and Medicare. Your employer matching half of FICA is your own liability, and it is genuinely owed, but it is not trust fund money and is not subject to the personal penalty. The IRS carves out the employer match and pursues only the employee-side withholdings when assessing personal liability.
Who is exempt from FICA tax?
Very few people. Certain nonresident aliens on specific visa types, some students employed by the school they attend where the employment is incidental to their studies, members of certain recognized religious groups who have an approved exemption, and some foreign government employees. Notably, there is no exemption based on age: an employee who is already receiving Social Security benefits still pays FICA on wages. And there is no exemption for part-time work: FICA applies to wages, not to schedules, so a part-time employee generates the same 7.65 percent employer obligation per dollar as a full-time one.
Do part-time employees pay FICA?
Yes, on every dollar. FICA applies to wages rather than to hours or schedules, which means a part-time employee generates exactly the same 6.2 percent and 1.45 percent obligations, on both sides, as a full-time one. There is no minimum earnings threshold below which FICA does not apply, and no exemption based on hours worked. Employers who assume that hiring part-time reduces their payroll tax burden per dollar of wages are mistaken: it reduces total wages, and therefore total FICA, but the rate is identical.
Do I pay FICA on myself as a business owner?
It depends on your entity. A sole proprietor or partner is not an employee and does not go through payroll, so they pay no FICA. Instead they pay self-employment tax, which is 15.3 percent on net earnings from self-employment, being both halves of FICA in one payment made through their personal return. An S corporation shareholder who works in the business is an employee, does go on payroll, and does pay FICA on their wages, with the company matching. This is why S corp reasonable compensation is a live issue: wages get FICA and distributions do not.
Is FICA withheld from bonuses?
Yes, in full. Bonuses are wages, and Social Security and Medicare apply to them exactly as to regular pay. What differs is federal income tax withholding, where a flat 22 percent may be used for supplemental wages paid separately, but that is a difference in income tax method rather than in FICA. The same is true of commissions, overtime, severance, and retroactive pay: all of it is wages, all of it gets FICA, and all of it is matched by the employer.
Do I withhold FICA from contractors?
No. Independent contractors are not employees, do not go through payroll, and have nothing withheld. You pay them the full invoiced amount and you owe no employer FICA on it. They pay self-employment tax themselves, which is both halves of FICA at 15.3 percent, through their own return. That absence of employer FICA is a large part of why misclassifying an employee as a contractor is tempting, and it is precisely why the IRS polices classification so closely. The saving is not a saving; it is a liability.
What form do I report FICA on?
Form 941 quarterly, which reports the wages you paid and the Social Security and Medicare taxes for that quarter, both the withheld employee portion and your matching employer portion. Some very small employers file Form 944 annually instead, but only if the IRS notifies them to do so. At year end, each employee's Social Security tax withheld goes in Box 4 of their W-2 and their Medicare tax withheld goes in Box 6, with the corresponding wages in Boxes 3 and 5. Those W-2 totals must reconcile to the sum of your four quarterly 941 filings.