How FICA Taxes Work: Social Security, Medicare & the Wage Base Cap
Understand FICA payroll taxes: how the 6.2% Social Security tax and 1.45% Medicare tax are withheld, the annual wage base limit, and the Additional Medicare surtax.
Key Takeaway
FICA is a mandatory 7.65% federal payroll withholding split between Social Security (6.2% up to the statutory wage cap) and Medicare (1.45% on all earnings, plus a 0.9% surtax for high earners).
What Is FICA?
FICA stands for the Federal Insurance Contributions Act, enacted under Title 26 of the United States Code (IRC § 3101). It funds two essential federal entitlement programs: Social Security retirement, disability, and survivor benefits, and Medicare hospital insurance for seniors.
For standard employees, FICA consists of two separate line items totaling 7.65%:
- Social Security Tax (OASDI): 6.2% withheld from your wages up to the annual statutory contribution and benefit base.
- Medicare Tax (HI): 1.45% withheld from all earned wages with no annual cap.
The Additional Medicare Tax for High Earners
Under the Affordable Care Act (IRC § 3101(b)(2)), an Additional Medicare Tax of 0.9% applies to earned wages exceeding statutory thresholds ($200,000 for Single filers, $250,000 for Married Filing Jointly). Employers are legally required to begin withholding this extra 0.9% once employee wages exceed $200,000 in a calendar year.
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Sources & Methodology
FinoQuick mathematical models are deterministic and adhere to statutory lending standards, Consumer Financial Protection Bureau regulations, and IRS publications.
Frequently Asked Questions
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